That 0% introductory rate for balance transfers sounds wonderful. But you could have to fork over a few hundred dollars, maybe even over $1,000, to take advantage of it. What gives?
A USA Today story helps explain the fine print for all of those credit card offers that never stop coming in the mail. The balance-transfer gotcha involves a mandatory fee new customers must pay in order to get that enticing 0% rate:
Lenders are still offering 0% introductory rates to card holders who are willing to transfer their balance to a new card. But increasingly, they’re charging fees of up to 5% on the amount you transfer, with no cap, says Ben Woolsey, director of marketing for CreditCards.com. That means transferring a balance of $20,000 could cost you up to $1,000.
Also worrisome: The “introductory” period for these rates is increasingly barely more than an introduction. You might only get that 0% intro rate for half a year:
A few cards are still offering 0% rates for up to 18 months, but a six-month introductory rate is becoming much more common, Woolsey says. (The credit card reform bill prohibits issuers from offering introductory rates for less than six months.) Be realistic about whether you can pay off your balance before the offer expires. And pay your bills on time: Some issuers will cancel your introductory rate if you make a late payment, [Bill] Hardekopf [chief executive of LowCards.com] says.