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Use it wisely, balance transfer could provide a way out from credit card debt. However, balance transfer is a slippery path! Credit card issues offer low interest credit card balance transfer not because they want to save you money, but instead they know most people who take-up the balance transfer are those who are not careful about spending money. They see a high chance that these people will blow another big hole again very soon by using the new card. So if you want to do a balance transfer, watch up these 8 common mistakes.

1. Put new charges on the credit card that you just do a balance transfer.
The low interest rate is applicable to the balance transfer amount only, which means all new charges are charged at 18% p.a. What’s more, the monthly payment you made goes directly to the balance transfer and your are only allow to pay-off those new charges once the balance transfer is fully settled. Simply puts it, you continue to pay 18% p.a for all the new charges at a compounded rate until you pay off the balance transfer. The safest way to avoid this is to keep the card at the drawer.

2. Have no intention to settle the debt
Do not use balance transfer to delay your debt payment perpetually. Instead, you should take this rare opportunity offered by banks to settle your credit card debt. Yes, you can jump from one card to another and became a “serial transferer,” but sooner or latter, you will step on that banana skin and fall flat.

3. Skip the terms and conditions
Read at least 2 times to find up any fine prints and caveats such as the right of the bank to change the interest rate without prior notifications, transfer fees and billing cycle.

4. Do not mark the calendar on the expiry date of the low rate
Mark your calendar! It is important to keep close eyes on when the low rate is going to expire to avoid being ambush by a high rate. Better still, work backward and work up a schedule to settle the balance transfer. Alternatively, start doing your homework to switch to a new balance transfer.

5. Do not shop around
Shop around, there are many offers available in the market. Choose one that come with lowest interest rate and processing fees. The lowest rate currently available in the market is 0% for 3 months. Do not sign up several cards at one go as this will lower your credit standing.

6. Do not stick to the rules
Make sure you follow the terms and conditions exactly such as on-time payment, this is to avoid unnecessary penalties like late payment fees and cancellation of the low interest rate.

7. Over confident
Pending on the amount, try not to over estimate your repayment capability and discipline by taking up the shortest period of balance transfer. The rule of thumb is usually 6 months at least.

8. Do not check your monthly statement thoroughly
Always check your statement carefully and if you spot anything ‘funny,’ immediate grabs the phone and call for clarification. Take down the particular of the representative, date, time and what were agreed on. Do not delay the call. Be prepared to stand at your ground and fight if you are not at foul at all. If all fails, consider switching.

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