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Have you, like me, been getting checks in the mail again? I’m not talking about real checks, (because that would mean that it was your money), but balance transfer checks, (not really your money, c’mon!).
Balance transfer checks became as scarce as a mommy midriff after the credit-crunch when lenders pulled back on “0% for 12 months.” But, those babies are back, repopulating our mailboxes, luring us with the possibility of lower- or no-interest loans. So, should we bite that apple? Here’s how to do it right so it doesn’t bite you back:
Know the fees and if they make sense. If you’re transferring a $5,000 balance to a 0% card and the transfer fee is 3%, does that extra $150 make sense? If you can pay that balance off in one year, at 14.99% you’ll pay $395 in interest so that fee is not bad at all. However, if you have a fee of 7%, you’re getting close to the transfer barely making sense.
Know you can lose that great rate. Should you be late on making payments, that 0% can go bye-bye with only 45 days notice from the card issuer. And sometimes, the resulting ‘penalty’ rate can be as high as 29.99%. Ouch!
Know that you can shop around. Why settle for that 3.99% for 10 months offer that you got in the mail? Did you marry the first guy who showed up? (If you did and you’re happy, amen!) If you have good credit, especially great credit, shop online for a balance transfer offer that has better rates and transfer fees. Try Bankrate.com and Credit.com.
Carmen Wong Ulrich is the author of "The Real Cost of Living" and the former host of CNBC's "On the Money."