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What Are The Best Credit Cards For Balance Transfers?

September 28, 2012 by Paul Ritz

People who are having a serious problem with debt have found that one good solution is to consolidate it. The advantages of debt consolidation are that you swap a number of monthly payments for just one. That payment should be much less than the sum of your current monthly bills. Plus, if you have angry debt collectors calling you night and day, this will get rid of them.

What is a zero balance transfer card?

Many people are consolidating their credit card debts by transferring them to what are called zero balance transfer cards. And no, when you transfer to the new card you don’t end up with a zero balance. But you do end up with a zero interest rate for anywhere from 6 to 15 months. Since you won’t be paying any interest during that time, you can use the money that’s freed up to pay down your balance and get out of debt faster.

The best cards for balance transfers

Many banks are now moving their marketing away from balance transfers that require no fees to interest-free purchases. Fortunately, there is still strong competition and the best deal comes from Chase, which offers as many as 15 months with no interest charges on its Slate credit card and no balance transfer fee.

Low interest rate

There are three credit cards where your interest rate will be locked in for as long as you have the debt. For example, PenFed (Pentagon Federal Credit Union) offers a Promise Visa with a 4.99% APR for whatever amount of time you take to pay off the amount you’ve transferred. Simmons First has a variable rate on both purchases and balance transfers that is now at 7.25%. Finally, Barklaycard is continuing to market its credit card Ring to more people on its waiting list. The US division of this UK banking giant is not offering a teaser rate. Instead it has set its adjustable interest rate at an even 8%.

No upfront fees

Simmons, PenFed and Barclaycard are still giving new customers the ability to transfer their balances without paying an upfront fee. However, only Chase still has a balance transfer offer that is fee-free on its Slate credit card. New card customers can lock in 15 months without paying any finance charges and take as many as two months to transfer their balances without paying any charges.

However, almost every other major credit card company has reinstated balance transfer fees for new customers at 3%. Wells Fargo raises its fee to 5% at the end of the card’s teaser period. And US Bank raises it to 4% at the end of this period.

Act fast

If you want to take advantage of one of these balance transfers, you need to act fast. According to one recent survey, most banks have tightened the timelines for their customers to transfer their balances at a discounted rate. The shortest processing times are from US Bank and Chase. Customers transferring to US Bank’s new Flex Perks Select Rewards Visa and its Visa Platinum card have only 30 days to complete the transfer. On the other hand, customers of the Discover Card must complete their transfers before the middle of December. PenFed’s offer expires on 31 December. New Wells Fargo and Capital One customers can transfer their balances until the end of their promotional periods.

The problems

The biggest problem with balance transfers is that they are only for new customers. For example, former customers of banks like Providian and Washington Mutual can’t qualify for the best offers from Chase. Ditto, HSBC and Orchard Bank cardholders who probably won’t earn automatic acceptance for Capital One’s offers now that all three of these live under one roof. Also, you may not qualify for some of these offers if you are not deemed creditworthy.

How Your Credit Cards Can Help You Save Money

September 21, 2012 by Paul Ritz

Did you know that this year is the second one in the row where we consumers are expected to run up credit card debt of $50 billion? It’s pretty clear that all of us need to cut down our credit card spending. But here’s the surprise –credit cards could help you save money and cut down on your credit card debt.

Zero balance transfers

Here’s the first way this could work. Many credit card companies are actually now offering zero percent introductory interest rates and rewards bonuses of up to hundreds of dollars. These are usually called zero balance transfer rates. You could use one of these to get rid of your balances on the other credit cards and then pay no interest for a year or longer.

Supplemental rental car insurance

A second way that your credit cards can save you money is by helping you avoid really wasteful expenses such as extended warranties and supplemental car rental insurance. A study from Progressive Insurance showed that the supplemental insurance offered by rental companies is purchased by 40% of consumers either some time when they rent vehicles or all of the time. Since this can run anywhere from $10 to as much as $20 per day, the cost of these plans can add up fast. Another study showed extended warranty plans are purchased by 31% of the people each year. This represents a lot of lost value for consumers.

Let your credit cards take care of these risks

It’s probably not necessary for you to take supplemental car rental insurance or any extended warranties. All four of the major credit card networks have some type of extended warranty coverage and complementary car rental insurance. However, the quality of this coverage varies a lot from network to network. Visa has the best supplementary car rental insurance coverage while the maximum extended warranty program comes from American Express. However, it’s important for you to understand that there are some differences between the networks’ programs. If you want to maximize how much you save, you need to understand what these are.

Rental car insurance

If you want to take advantage of rental car accident insurance as offered by your credit card, you must pay the entire cost of the rental with your card. This means you must turn down any supplemental policy the rental company offers you. Beyond this, there are five factors that determine if you will be covered. This includes the type of card you have, the kind of vehicle you rent, where you rent the car, the type of road on which you had the accident and the damage incurred.

Extended warranties

All four of the credit card networks will extend an existing manufacturer’s warranty for up to one year. However, this does not mean that everything you purchase will be covered. This will depend on several factors, including your card and what you buy. For example, none of the four networks will cover computer software, plants, buildings, motorized vehicles, etc. And only American Express will cover items you purchase that have been refurbished but still have with the original manufacturer’s warranties.

Other factors

Another important factor is the length of the original warranty. For example, Visa and Discover cover warranties that are three years or less, while MasterCard covers only purchases with warranties of one year or less. American Express covers items you purchase that have a maximum warranty of five years. Your coverage will also depend on how the item is damaged. If you have a product that was damaged as the result of a power surge, Discover, MasterCard and American Express will not cover it. Discover and MasterCard exclude what’s called “normal wear and tear.” This can be somewhat confusing. And MasterCard won’t cover physical damage done to an item or if lack of maintenance caused a mechanical failure.

This all means it’s important to check out what your credit cards do and do not cover when it comes to rental care insurance and complementary extended warranties. However, all told you’ll probably find they include coverages that could save you hundreds of dollars a year.

Filed Under: Blog Tagged With: credit cards, How Your Credit Cards Can Help You Save Money, zero balance transfer

Zero Balance Transfer Offers For Debt Consolidation

April 29, 2012 by editor

Do you see your debt as a grizzly bear up on its hind legs with claws flashing waiting to tear you to pieces? Or maybe you see it as an octopus wrapping its tentacles around you and trying to drag you down into the bottomless depths. If you do see your debt as some kind of monster, you may be thinking about one of those zero balance transfer offers for debt consolidation and wondering if this could help you.

The good and bad news

The good news is that there are a number of credit card companies now offering zero balance transfers. If you’re not sure what this is, it’s not a credit card with a balance of zero. Instead, it’s where you transfer all your credit card debt to a new credit card that has an interest rate of zero for some period of time.

A zero balance transfer will provide debt relief but only short term. In some cases, the company making the zero interest offer will give you 18 months or more before it begins charging you interest. Let’s suppose that you have credit card debt of $5000 at a 5% interest rate. If you transfer this to a new card that has zero interest for 18 months, you would save $700. You could then use this money to reduce your credit card debt.

Read the offer carefully

As people in the advertising agency business like to say, “the big print giveth and the small print taketh away”. This is a shorthand way of saying that before you accept any offer for a zero balance transfer; make sure to read it carefully–including the fine print. You might find that the zero interest rate lasts for just 6 months and not a full 18. You could also find that the offer is good only for people with a credit score of 800 or better. In some cases, you won’t actually know for how many months you’ll have zero interest until you submit an application and the credit card company reviews it. If they advertise six months of zero interest you should get at least six months. However, whether you get more than six months or not will be determined by the credit card company and will be based largely on your credit score.

What happens next

It’s also important to know what will happen at the end of the 6 or 18 months of zero interest. For example, one credit card company recently advertised a zero percent introductory APR on balance transfers for 15 months. However, a variable rate APR then kicks in at 10.99% to 20.99% based on your creditworthiness. This means you won’t know what your APR will be until the credit company tells you what it is. And it could be a shocker.

A better alternative

As you can see, the big disadvantage of a zero balance transfer is that you could end up with an outrageously high interest rate. In comparison, there is an alternative called debt relief or debt settlement. Most people are not aware of this but, given the proper incentive, the credit card companies will agree to reduce both your debt and your interest rates.

This is not something you should try yourself. The credit card companies are very skilled at these kinds of negotiations and you probably aren’t. Many families have done the smart thing and hired a third party company to do the negotiating for them. For example, the company National Debt Relief has helped many Americans get debt relief. In many cases National Debt Relief has been able to get credit card debt reduced by 50 percent or more and help their customers become credit card debt free in from 24 to 48 months–depending on how much is owed.

You can get more information on debt relief at http://www.nationaldebtrelief.com. Since the company charges no upfront fees it will cost you absolutely zero to learn what it could do for you. And that zero could end up being better than zero interest.

Filed Under: Debt Consolidation Tagged With: balance transfer, credit card debt, debt settlement, zero balance transfer