Beware of Balance Transfer Fine Print

Are you thinking about transferring a high interest credit card debt to a new card with a seemingly great balance transfer offer? If so, it pays to read the fine print. That offer on your balance transfer card may not be all that it is cracked up to be.

Often, a great introductory rate is advertised on a balance transfer card. An APR of 0 percent may be offered, making choosing the card seem like a slam dunk.

Despite a great introductory rate offer, be sure to verify when a balance transfer must be completed by to qualify for the offer. For example, the Citi Simplicity card offers a 0 percent APR on balance transfers for 18 months from the first transfer. Sound’s easy enough, right? Then, if you read the fine print, you’ll notice that the first transfer must be completed within 4 months of account opening. This isn’t completely unreasonable, but it could be very misleading to the untrained eye. Just imagine how many people who skimmed or neglected to read the terms entirely would be surprised that they have to pay interest on a balance transfer because they didn’t get it done on time.

The same applies to other Citi cards, as well. Cards such as the Citi Diamond Preferred card and Citi Platinum Select MasterCard have the same 4 month requirement as the Simplicity card. So, just make sure that your chosen card doesn’t have similar strings attached and you should be able to avoid paying interest on your balance transfers for a while.

Balance Transfer Fees: Watch Out!

Dear CreditShout, My balance transfer card supposedly came with a 0 percent APR for 15 months. Why the heck did I get hit with a fee?

We get questions like this all the time. If you’ve had this reaction before, you probably didn’t read the fine print. The fine print likely mentioned a balance transfer fee of something like $10 or 4 percent of the transaction, whichever is higher. So, although the issuer advertises it’s great introductory rate on balance transfers, you won’t see a leprechaun dancing in a TV commercial while screaming how high the card’s balance transfer fees are. Well, that sounds more like a get-rich-quick scam than a credit card commercial, but you get the gist of it.

Thus, even though you won’t pay any interest on your balance transfer, a fee of, say, 4 percent (a relatively common amount) would cost you $400 on a $10,000 balance transfer. That’s a hefty wad of cash going into the issuer’s pocket for a relatively simple transaction, courtesy of your wallet.

Say Goodbye to Your Low APR if You Pay Late

If you make a late payment, you may lose your introductory APR. Instead, you’ll have to pay the penalty APR, which is typically very high.

For example, with the US Airways Premier World MasterCard, this is just the case. According to their terms, they may revoke your introductory APR and apply the penalty APR if you make a late payment, which is up to 30.24 percent. Of course, you’d also be subject to a late payment fee (of up to $35 in this case), which will pile on to the fact that you’ve already lost your low balance transfer APR.

This may not be the case with your chosen card, so be sure to read the terms and conditions before applying for a balance transfer card.

Are Any Balance Transfer Cards Not Complicated?

Do you want a balance transfer card that won’t make you feel like you’re rolling the dice every time you complete a transfer? There are a few relatively low hassle cards on the market. Note that none of the cards below requires you to complete a balance transfer within a shorter timeframe than the introductory APR suggests:

Credit Card BT Intro APR Intro Period BT Fee Regular APR Annual Fee
Capital One Platinum Prestige 0% 15 months 3% 10.9 to 18.9% $0
US Airways Platinum MasterCard 0% 15 months $10 or 4% (3% During Intro) 15.99 to 24.99% $49
Capital One Cash 0% 15 months 3% 12.9 to 20.9% 0

Editor’s Note: You can find our current recommendation for balance transfers in this up to date Guide.

These are just a few of the balance transfer cards out there that have few strings attached. Of those listed, I recommend going with the Capital One Platinum Prestige card, as it has no annual fee and a very reasonable fee structure for balance transfers. However, it never hurts to shop around, so you may find other good deals if this card doesn’t suit you. In general, though, I have found that Capital One offers the least hassle of any card issuer, so keep this in mind if you’d rather avoid the headaches that complicated credit cards can bring.

It’s rarely a good idea to sign up for a credit card or any other financial product that is highly complicated or has hidden terms. Yes, they are technically informing you that you will have to complete a transfer within 4 months or follow some other odd term, but it is usually hidden where a lot of people, rightly or wrongly, won’t read it. So, go with a Capital One card or some other relatively hassle-free balance transfer card if you’d like to sleep at night. Let’s leave the tricks and games to the politicians!

About the author


Kevin founded CreditShout in 2008 to help people manage their credit and finances. He wants to make it easy for anyone, regardless of their level of financial knowledge to understand credit cards and what may seem like the complex world of personal finance. | Author Google+