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Don’t Make These 5 Mistakes With Balance Transfers

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store-credit-cards-suckWhen credit card holders are fighting debt, interest payments can be their biggest enemy. A 0% APR promotional balance transfer can be an incredible tool in this fight, but only when used properly. To gain the maximum advantage from these offers, avoid the following mistakes:

Don’t try to transfer between cards of the same institution. Balance transfers can only occur between competing banks, not from two credit cards issued by the same company. Unfortunately, this fact is not usually spelled out in the card’s terms and conditions, and cardholders will only find out when their request for a balance transfer is rejected. Thus, while you can transfer from one Visa to another, you cannot transfer balances from one Chase credit card to another Chase credit card that offers 0% APR balance transfers regardless of whether it is a Visa or a MasterCard.

Never wait too long before transferring a balance. Credit cards incur interest base on the cardholder’s average daily balance. Therefore, each day that cardholders wait before opening up a new account and performing the balance transfer is another day when they are incurring interest.

Be careful not to create more debt. Cards that feature promotional balance transfers often have 0% APR financing on new purchases as well. This can tempt some cardholders to spend more, perhaps in the hopes that they can still pay off their entire balance before the promotional financing expires. Unfortunately, these cardholders will often fall into the same cycle of overspending that got them into debt in the first place.

Check the balance on the card that is paid off. Cardholders who execute a balance transfer tend to assume that their old card is entirely paid off. That can be a mistake. Unfortunately, a balance transfer may take a few days to be complete. In that time, the old card’s balance has grown due to the daily calculation of interest. After a balance transfer is completed, cardholders should immediately check their old account and make a payment for the entire remaining balance.

Watch out for different financing terms on new purchases. Some credit cards may offer 0% APR  financing on new purchases for a different time period than its balance transfer offer. One of the loopholes in the CARD Act is that banks must apply payments above the minimum to the balance with the highest APR. So when cardholders pay only the minimum, the entire payment may go to the interest free balance transferred, not the new purchases that have begun to incur interest.

By realizing all of the ways that some cardholders make mistakes with balance transfers, cardholders can avoid these issues and save as much money as possible.

To learn more about current offers, please see the balance transfer credit card comparison section of or our ranking of 2013’s best balance transfers.

Editor's Note: This content is not provided by Citi. Any opinions, analyses, reviews or recommendations expressed here are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by the Citi or any of the other companies whose products are featured in this content.

About the author

Jason Steele

Jason Steele is a freelance journalist specializing in personal finance and travel and is recognized as an expert in credit cards. He is a regular contributor to many of the top personal finance sites such as Wise Bread and Money Talks News. His work has been frequently carried on mainstream news outlets such as MSN Money, Yahoo, Finance, and Business insider.

Jason lives in Denver Colorado with his wife and two daughters.

– has written 350 posts.

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