Credit Card Switches
A study completed a year ago showed that credit card costs were increasing on such things like interest rates, fees, and even the introductory offers were changing. This study looked at 19 credit cards on the market to compare them for their differences. Part of the reason for the study was to encourage consumers suffering from debt to switch cards, but is that the right thing to do?
Most credit card holders are not aware of the balance transfer deals terms and conditions. There are very specific things one should know before taking advantage of the deals. One reason for this is the reversal to a standard rate even during a deal, but more on that later.
For consumers credit cards have become a crutch. In Ireland they are not nearly as bad as other countries, but still there is a high amount of debt on the credit cards to date.
Balance transfer credit cards are seen as a saving grace for debt. Consumers have been talked into changing their cards over to take advantage of these deals. The deal states that you have zero percent interest for a set period of time when you transfer a balance by a certain date. However:
• A consumer needs to be able to either pay off the debt before the end of the special or be able to transfer what is left to another new deal.
• A consumer also needs to be able to transfer the entire amount. Most new credit cards are going to offer a lower amount for the limit than the older card. This could mean transferring it all is not possible. If you can’t transfer it all you are only paying a smaller amount of interest on one card. It does help to a certain extent, but it could also hinder as you have more to pay off.
• The date of the transfer must occur within the time limit, which can also be difficult as you must wait for the card to arrive before the transfer is made.
• Once the balance transfer deal is over the interest rate reverts back to the annual percentage rate. At this point a consumer may be able to change cards again, but it will depend on how much credit is open at the time.
• There is a 2.5 to 3 percent fee on the balance transfers. Normally the fee is no larger than 100 Euros, but that can be pretty expensive in relation to the savings. A calculation should be completed before entering into the deal.
• If a payment is missed or late the terms of the special end and the credit card interest rate is the annual percentage rate quoted. This rate can then change in the following month or weeks to increase by universal default.
Before using these cards the options should be weighed and compared. Most terms and conditions are the same according to the study of 19 cards. Occasionally the limit on such others will be shortened especially now.
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