There are balance transfer credit cards that can be attractive for Servicemembers, but to make sure that it’s a wise choice you have to look at several factors.
Balance Transfer Fees- For most credit card offers, the balance transfer fee tends to be about three percent of the amount that is transferred. If you transfer five thousand dollars, that would be about one hundred fifty dollars in fees. Look for companies or credit offers that limit this fee to no more than Seventy-five dollars. They are a little harder to find, but it is worth it to be selective. The balance transfer fee can be the single largest cost to compare when shopping for a new card.
Introductory Rates- The new introductory rate on a credit card application is one of the reasons people are tempted to transfer. They can last a year, six months, and in some cases the introductory rate is the permanent rate unless you miss a payment or otherwise go in arrears. If you can pay off the balance on the card when the rate is low, or if the rate is permanent, then it can be advantageous to transfer your balance. Remember that repeated credit balance transfers can damage your overall credit record; banks look closely at repeated balance transfers when they decide to grant loans or home refinancing.
New Purchase Interest Rate. Some people think that when they transfer their balance with a low or greatly reduced interest rate, that this rate is also good for new charges or purchases on the new account. While this is possible, it is fairly rare.
Most cards that transfer balances charge a higher rate for new charges to the account. Be sure that you understand the rate structure and rules, there is often a trigger associated with low interest rates. For example, being late on a single monthly payment is often enough to trigger a huge monthly interest rate jump.
Getting the Best Rate. Getting an advantageous interest rate comes down to one determining factor: Your credit score. Your credit score is your own personal three-digit number; with a higher number meaning you are a better credit risk. The scale is from about 300 to 850, and a higher score means that banks and lenders believe you to be a better risk and more responsible.
Getting the best interest rate on a loan comes down to one important number: Your credit score.
One of the single biggest things you can do to keep and build your credit rating is to make timely payments. Pay your bills and debts on time. When you do this, your credit rating will improve, sometimes dramatically.
