March 17, 2009
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Guidelines to the CC Fine Print, Pt.3
Balance Transfers are full of ‘gotcha's.Balance Transfers: Transferring debts to one credit card is especially popular for consolidating debts and for lowering interest rates. But, there are a few caveats that credit card lenders like to throw in there in order to make a few more bucks off you:
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Transfer Fees: This is the number one ‘gotcha'. As of late, this mention is always hidden in the fine print. The marketing descriptions will always tout the benefits of transferring other high-interest credit cards into a lower-interest account. But only if you get into the fine print will you know in advance about the 3% to 10% fee you'll be charged when you do this.
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Caps: On the same note, ‘transfer fees' originally, were rare. As they became more wide-spread, caps were always included so to implement the concept of ‘transfer fees' without scarring people off. So, a reasonable cap was always included (like $25 max for under $1,000 transfer or $75 cap for over $1,000 transfers). Today, even those ‘caps' are becoming rare in credit card offers so, a $5,000 transfer could cost you as much as $500 in ‘Transfer Fees'. Very seldom is this a good deal. Look for offers which limit these fees with ‘cap's.
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Promos (Special Rate): Balance Transfer promos are probably the most common form of promo you see publicized today. They, largely, play by the same rules mentioned in the section called ‘Promos' in article #1 of this series. Additionally, they have some unique caveats like the ‘embellished wording' that Capital One used on me. The offer touted "0% APR on Balance Transfers for 6 months." What they didn't explain was the ominous little reference in the fine print called ‘Special Rate'. It wasn't even explained anywhere in the contract nor by the person who opened the credit card account for me. After the damage was done, it was explained that persons who elected for Balance transfers at the time of opening the credit card account were assigned to the ‘Special Rate' category which carried a 7.99% APR instead of the 0% APR. Only those who elected a balance transfer some time after opening the account could qualify for the 0% rate. This is total deception but is still going on in the industry. New federal regs will change this but, not ‘til mid-2010. Beware of ominous marketing phrasing.
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