No balance transfer Catch 22 is more insidious than default. Essentially, default occurs when you fail to pay your bill on time. When this occurs, your 0% interest rate is voided and you can be charged anywhere from 11% to as much as 29%, depending on the specific terms of your credit card company.
In the past, it was often possible to negotiate your way out of credit card default. However, over the past year, credit card companies have been seizing every opportunity they can to raise interest rates on consumers.
What can trigger credit card default? As absurd as it sounds, sending in your payment one day late can be enough to send your interest rate from 0% to 30%. Similarly, going over your credit limit may trigger the same penalty.
Fortunately, avoiding this Catch 22 is relatively easy: simply pay your bill on time. In fact, pay it early, just in case. However, many of us are having a hard time keeping current on our bills. If that is the case, it is important to prioritize your expenses. If you can put off a cable bill and use the money to pay your credit card bill, by all means do so. Going in default on a $5000 credit card balance can cost you as much as $1500 in interest. Paying your cable bill late may mean watching more network TV than you are used to. However, that is a small price to pay in comparison to cost of defaulting on your credit card.
Related Posts
- Updated Consumer Advisory on Balance Transfer Checks
In early July, I posted a consumer advisory on balance transfer checks. At that time, I had received a few emails from consumers complaining about Citibank balance transfer checks that were not being honored. When I published the first advisory, I had expected a flood of new comments from angry consumers. When those complaints didn’t [...]...
- Credit Card Balance Transfer Fee Report for August 2010
As a result of increased balance transfer fees on a number of Citibank credit cards, the average transaction fee charged on balance transfer offers lasting 12 months or more increased once again in July to 4.1%. Two Capital One credit cards, the Platinum and Platinum Prestige card, offered the lowest transfer fees at 3% on balance [...]...
- Balance Transfer Fee Credit Card Report for June 2010
During June, all the major credit card companies continued to charge three to five percent balance transfer fees on 0% APR balance transfers with no maximum fee cap. While some companies are offering low balance transfer fees of 3%, many are charging 4 and even 5%. Citibank and Capital One credit cards offer 0% balance transfers with [...]...
- Balance Transfer Credit Card Fee Report for July 2010
See Balance Transfer Fee Update for late July Changes in balance transfer fees. Balance transfer fees edged up in July, mainly due to a fee increase from Citibank. Citibank, which had been charging 3% balance transfer fees, increased the fees on most of their cards to 4%. Despite this slight increase, 0% balance transfer deals [...]...