 Don't Transfer Balances When You Apply Online
Overview: A few months ago, transferring balances online was a fast and easy way to consolidate high interest credit card debt onto a 0% credit card. Today, a number of factors, including the unwillingness of banks to extend credit for the purpose of balance transfers, has made transferring balances online a dicey proposition.
Now, applying online is still the fastest way to get a new card for balance transfers. However, it is important to wait until your application is approved and your card arrives in the mail to begin the balance transfer process. Here are just a few reasons why you should not transfer balances online.
Reason #1 - Getting Approved: Before the credit crunch, banks used 0% balance transfer offers to lure in new customers. Today, as you may have learned the hard way, credit card companies really don't care about their own customers, let alone new ones. The few credit card companies that are still offering 0% APR deals aren't interested in taking on your old debt. They want customers who will use their cards for purchases, thus earning them transaction fees.
Consequently, when you apply online for a credit card and elect to transfer balances online with your application, you may decrease your chances of getting approved or, if approved, get a card with a lower credit limit than you need.
Reason #2 - The Go-To Interest Rate: In the fine print of just about every credit card, you will find that more than one long term interest rate is offered. Some companies even offer multiple 0% periods, based on a review of your credit.
In the past, the long term interest rate was much less of an issue than it is today because consumers could hop from one 0% credit card to the next as soon as 0% periods ended. Such is not the case today and will likely not be for the next few years. Thus, when doing a balance transfer today, it is important to consider the long term interest rate as well as the 0% rate period.
Unfortunately, most credit cards do not reveal your long term rate until after your application has been reviewed. Thus, you may get approved for a 0% APR balance transfer, but end up with a relatively high long term APR. Consequently, the best course of action is to wait until your card arrives in the mail so you can base your balance transfer decision on both the long and short term interest rates.
Reason #3 - The Length of the 0% APR Period: While some credit card companies deliver on the full advertised 0% period, other companies, such as Chase, advertise 0% rates for up to 1 year, but may only grant approved applicants a 0% rate for as little as 3 months. These tiered 0% periods are clearly stated in the fine print, but nevertheless pose a problem for unsuspecting consumers who transfer balances online expecting to get a 0% rate for a full year. (At Smart Balance Transfers, we note which credit cards offer tiered rates)
Final Thoughts: Applying for a balance transfer credit card online is not as easy as it once was. And, for the foreseeable future, getting approved for a low rate card with a good introductory offer is proving to be much more difficult than it has been in a decade. Meanwhile, the availability of 0% balance transfer offers is declining sharply as credit card companies shun these consumer-friendly transactions. Fortunately, decent balance transfer deals still exist. However, it is more important today than ever before to wait until your credit card arrives in the mail before initiating a balance transfer.
Apply for a 0% APR Balance Transfer Credit Card
1 July 2009 |
