Living with credit

5 lessons from my first balance transfer card

Kelly Dilworth

Earlier this week, I took advantage of a 0 percent balance transfer offer for the first time since I started using credit. The process of searching for the right balance transfer card and applying for it went relatively smoothly.

However, this veteran personal finance writer stumbled a few times – such as when I failed to actually review carefully what I was transferring – and as a result, I learned some things along the way.

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Why did my husband and I apply for a balance transfer card? Well, we’re in a period of transition and potentially facing some big upfront costs this summer as we get ready to move out of our campus housing. (Destination: who knows.)

To conserve cash for a potential cross-country move, it made sense to transfer some of our big recent purchases to a card with a 0 percent interest rate and lengthy promotional period.

Here are five lessons I gleaned from my first balance transfer:

1. Balance transfer fees really do add up.

Though I’ve frequently written about how crucial it is to compare balance transfer fees, it wasn’t until I prepared to apply for my own balance transfer card that the fees’ true cost hit home.

Most balance transfer cards, for example, charge a 3 percent fee to transfer your balance. But some cards charge fees as high as 4 or 5 percent. Others don’t charge a fee if you transfer your balance within a few months of opening your new credit card.

If you plan to transfer more than a few hundred dollars, a 3 to 5 percent fee can really hurt.

Since the debt I transferred included some unusual expenses and deposits – as well as some living expenses that my husband and I usually charge and then pay off in full each month – the total I transferred was $7,000.

That amount would have cost $280 to $350 in fees if I had chosen a card with a 4 to 5 percent balance transfer fee. Even transferring $7,000 to a card with a 3 percent balance transfer fee would have resulted in a painful fee – $210.

Instead, I chose to transfer my balance to the BankAmericard Mastercard, which waives the transfer fee if you transfer your balance within 60 days of opening your account. Not paying a fee made transferring the balance worth it.

As long as I pay off my balance in full within the next 15 billing cycles, I won’t have to pay a penny in interest or in extra charges.

2. Don’t wait to transfer your balance.

I transferred my balance right away, and I am glad I did since the promotional clock started ticking as soon as I opened my account.

If I had applied for the card and then waited a few weeks to transfer my debt, I would have lost valuable time that I could have used to pay down my balance interest-free. I nearly made that mistake, too.

After deciding that a balance transfer made sense for us, I impulsively started to fill out an application. Then I remembered that my husband and I hadn’t yet talked about what specific charges we wanted to transfer, and how much we wanted to put on a new card.

The amount of time I would have lost wasn’t a big deal, but I was still better off waiting until my husband and I had nailed down a plan before I applied.

3. Not all credit cards let you transfer someone else’s balance.

In our case, we wanted to transfer my husband’s credit card balance to a card in my name. That way, he would have a lower credit utilization ratio and still be able to get a competitive rate on a personal loan if we needed a little more financing.

Not every credit card issuer would let us transfer my husband’s balance since my name isn’t on his card, so we had to do a little scouting.

For example, some card issuers, such as American Express, will only transfer debt that belongs to the person requesting the transfer. If your name’s not on the card account, you’re out of luck.

Other card issuers are more flexible. In our case, Bank of America just asked for my husband’s account number and the amount that we wanted to transfer.

4. Make sure you pick a card from a different issuer.

When I first started researching balance transfer cards, I looked specifically for cards that don’t charge a balance transfer fee.

I started to zero in on the Chase Slate card, then I remembered that my husband’s Sapphire Reserve card was from Chase. Card issuers typically won’t transfer a balance from an account at the same bank, which makes sense.

I’m sure banks would much rather use free balance transfer offers to lure new customers.

5. Carefully review transactions before the transfer.

One of the biggest mistakes I made was carelessly transferring my husband’s balance before taking the time to look through the transactions I was shifting to my card.

As I learned when I applied, transferring a transaction from one bank to another could have threatened our ability to win a merchant-related dispute.

In our case, it didn’t matter, but transferring the balance could have hurt us if my husband needed to dispute one of those transactions with a merchant.

Bottom line: Interest-free balance transfers aren’t for everyone and can be risky if you’re not careful.

For example, if you don’t aggressively pay down your balance during the interest-free period, you could get hit with some painful charges in the future. I’m grateful, though, to have had the option to use one when I needed it.

By freeing up cash now and spreading out our loan payments, the interest-free balance transfer has saved us money and given our family some much-needed flexibility.

See related: What is a balance transfer? 9 things you should know, Balance transfer credit card reviewsBalance transfers hold steady despite interest rate increasesWhat to do when a balance transfer credit line isn’t big enough

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