Learn to Spot the Hidden Danger Lurking in Many Balance Transfer Programs


I’m a big fan of balance transfer debt management. After all, who wouldn’t appreciate transferring debt from one pile to the other without paying interests?

Who wouldn’t appreciate enjoying a system that enables you to pay down debt without having to worry about your debt expanding due to interest rate fees? The benefits are very easy to see.

The problem is so many consumers get so excited about managing their overall debt load through balance transfers that they consistently fall into a very common trap. Keep in mind that the financial institutions offering these programs still have to make money. They still have to pay their rent. They still have to cover their employees’ wages. In other words, they need to generate profit.

So you have to pay attention to how they take care of the bottom line. There are many hidden dangers in balance transfer programs that too many consumers simply ignore or overlook. If you don’t want to end up with a nasty surprise at the end of a certain month as you try to pay down your credit card debts, you have to learn how to spot these hidden dangers.

Otherwise, you are leaving yourself vulnerable. You might end up in a situation where instead of avoiding tough financial problems, you simply end up jumping into more financial holes.

Fees Can Make it Hard to Jump from Card to Card

Different credit cards have a wide range of fees that they can charge. Pay attention to these fees. Most importantly, get a clear understanding of the events that would trigger these fees.

Different credit cards have different triggering events. Different credit cards have different fees that cover a wide range of situations. Know what these fees are. Know how much they cost. And know their overall impact to your balance transfer debt management technique.

Always Read the Fine Print

A lot of your financial drama and problems would go away very quickly if you pay attention to the fine print. You only need to read the fine print of these credit card applications and you will see the issues that may appear in the future. As long as you avoid certain situations, then you don’t have to suffer the spike in interest rates. Likewise, you don’t have to hassle with the nasty fees that you have to pay.

You have to remember that the more fees these financial institutions charge, the more profit they generate. So it really is an arms race between savvy borrowers looking to eliminate their debt through balance transfer management, and financial institutions that are looking generate a profit. Don’t get caught in a trap. The problem is it’s an obvious trap. They just give you a form that has a fine print on it. If you don’t read the fine print, you’re going to suffer the consequences.

Different Types of Fees

There are actually many different types of fees that financial institutions use to get money out of their account holders. The most common type of fee is a contingent fee. What this means is there is some sort of condition that appears, like for example, failing to make your payment on time, and then all these fees blow up.

Pay attention to these. See how they are related to each other. Also, pay attention to penalties. You have to remember that if you don’t actively manage these because you’re unaware of them, they can actually add up. In fact, they can get so big that whatever advantages you were seeking to enjoy by using balance transfer management to get rid of your debt would simply evaporate.

So be very careful regarding the different types of fees. Know when they are triggered. Pay attention to the difference between fixed fees, variable fees, and penalties.

Penalties can get quite nasty. The good news is that in the United States and most jurisdictions, liquidated damages are against the laws. But there might be certain exceptions in your jurisdiction, so be clear as to what your rights are. Pay attention to the state-by-state breakdown that many national lenders are required by law to provide.

Read that fine print. Otherwise, you’re simply signing a large chunk of your personal financial life away. Instead of managing your personal finances in a clear and rational way, you are essentially, for all intents and purposes, simply rolling the dice. That is not a winning strategy.