7 Times When a Balance Transfer Offer Is Just Not Worth It!

There are a lot of tempting balance transfer offers out there, but not all of them will prove to be a good deal for you. Unless you carefully and diligently scrutinize the complete set of terms and conditions, you may find that it’s not you, but your cardholder, who stands to gain from the arrangement. Here are a few examples to illustrate the times when it would be better for you to leave the balance on your old card, instead of transferring it to a new one.

1. You’re doing it to avoid payments: Typically the whole point of a balance transfer is that the promotional period gives you an opportunity to pay off your dues without incurring further interest. However, if you’re using it as an excuse to postpone or avoid payment, you are likely to suffer. While you may succeed in avoiding the payment this month, you may not be so lucky when the next one rolls around. Moreover, given that balance transfers take time, your payment for the current month may become due before the transaction is executed.
   
   
2. You’ll have to pay an annual fee on the new card: Many credit cards charge annual fees; for some, these may be so steep that they’ll outweigh the amount you save from a lower balance transfer rate. In such cases, it’s advisable to use a balance transfer calculator first to determine the comparative cost of transferring your balance.
   
   
3. Your new card has a lower credit limit: Credit utilization ratio is defined as the percentage of total available credit that is used by the consumer. Anytime this proportion exceeds 30%, your credit score could take a hit. Thus, if the new card has a lower credit limit than your old credit card, your score may be damaged due to an increase in your credit utilization ratio - at least till the time you pay off your balance and bring it below the acceptable limit.
   
   
4. You won’t be able to pay off the balance during the promotional period: A balance transfer deal gives you access to a promotional low interest period - which in turn enables you to reduce your finance charges. During this time, you rack up little or no interest. Thus, more of your payments can be applied towards lowering your actual credit balance. It is very important that you take advantage of this situation and pay off your entire balance before this period expires as, after that, you may find the interest charges have skyrocketed. There are many credit card payment calculators available online that can help you determine the amount of monthly payments you’ll need to make to make the most of the offer.
   
   
5. The new card already has a balance: If you transfer your balance from an old card to a new card which already has a balance that’s accruing interest at a higher rate, you may not benefit much. This is because even if the issuer offers you a 0% rate on the balance transferred, any payment you make on the card will be applied first towards the minimum payment and then towards reducing the higher interest rate balance. Thus you may not be able to pay off the transferred balance during the promotional period and therefore be subject to higher rates once it is over.
   
   
6. You are not eligible for the promotional rate: Often credit card companies tempt consumers with great pre-approved balance transfer offers. However, once the issuer actually examines your credit report, he may downgrade the terms of the deal and offer you a much higher rate which may not be of much use.
   
   
7. There is a significant balance transfer fee: Typically banks charge a balance transfer fee of somewhere 3-5% of the amount of credit card debt that is being transferred. Taking the average, 4%, if you were to transfer $10,000, you would pay $400 as a balance transfer fee. Use an online calculator to see if this fee is worth paying, or if you're going to net out at a loss.

Not just credit card companies, but even banks and financial institutions often use this tactic on unsuspecting consumers – they attract them with offers of preapproved loans, and when the individual approaches the organization, he is handed a disappointing deal. This can be very frustrating, especially in cases where the consumer had hoped to get a low interest loan to fund his or her business.

Luckily, for such individuals, our team at Fund&Grow has a great solution. For a flat fee, we help our clients get as much as $250,000 of unsecured credit at 0% interest. Moreover, we take care of most of the paperwork for you, so that you can concentrate fully on your core business. If you’d like to learn more about this, call us at (800) 996-0270 and we’ll do our best to help you out.