Ramsey County

Making $ense of Dollars and Cents

January 14, 2008

Finding a Lower Rate

          Historically, one of the main tactics credit card companies have used to attract new customers is offering a lower interest rate than what you are currently paying on your credit card account.  Transferring your credit card balance from a high-rate card to a lower-rate card can lead to major savings.  For example, moving $5,000 from a card with a 14% interest rate to one with a teaser rate of 5% can make a different of almost $3,000 in interest if you pay only the minimum amount for the ten plus years it would take to pay off the $5,000.

          When transferring a credit card balance, consider the following tips. 

 - Take into account how much you can pay towards your balance each month and how long it will take to pay it off; then find the card that fits your time frame for paying off your balance. The 0% intro rate for most cards is 6-12 months. These are a good choice if you can pay off your balance during this period with the lowest rate. For most cards though, the rate after this introductory period may be higher than average. If it will take over a year to pay off your balance, look for a card that may offer a slightly higher rate for balance transfers, but the rate is fixed for the life your balance.

 - . Check if the low rate is only for the amount you transfer or if it includes new purchases as well. In most situations, any purchase made with the new card will be at the much higher rate.

 - Your credit card score may affect the interest rate you are offered.  Consumers will low credit scores often find themselves with different interest rates than those with better than average credit card scores.

  - Know what the transfer fee is. Commonly now, transfer fees are 3% of the amount being transferred. Know the fees before you transfer your balance. Always factor in the fee when comparing intro rates, because a high fee can drastically change the benefits of the offer.

 - Check if you will be able to transfer all of your balance. Consumers with a high credit card balance may be allowed to transfer only part of that balance.  The amount that you can transfer to a new card is determined by your approved credit limit.

 - And finally, if you do transfer a credit balance, make your payments on time!  Many offers have a universal default clause that if the consumer is late with even one payment, the interest rate jumps up immediately.

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524 4th Ave NE #5, 2nd Floor Ramsey County Courthouse
Devils Lake  ND  58301
701-662-7027
email - ramsey@ndsuext.nodak.edu