Using a credit card comes with a lot of responsibilities and expectations, especially if you are a newbie. There are some basics which you need to understand before you start using a credit card. First of all, know the importance of a good credit score. The credit score is determined by your credit utilization. How much of your credit do your actually use up? Do you use up all of it?
If yes, then you should try to cut down on the usage since it will give you a very bad credit score. Experts recommend a maximum of 30% usage. This means that, for example, if your credit card limit is $100, you should use up to $30 maximum in order to maintain a good credit score. That said, here is a checklist for your balance transfer credit card:
Keep off using your credit card at an ATM
Using a credit card at an ATM will result in it being treated as a cash advance. As a result, your credit card will charge an upfront fee in the form of a cash advance which is normally around 5%. On top of that, the cash advance fee comes with an interest rate that is very high and can go up to 20% or more!
Moreover, the cash advance comes with no grace period. Therefore, the interest starts accumulating right away, so watch out and keep off using your credit card at an ATM.
Always make timely payments
As stated earlier, credit cards come with a lot of responsibilities. These include making timely payments. Most credit cards attract very high charges immediately you fail to make your payments on time. In fact, if your payments are late by 30 days or more, the credit card companies will report you to the credit bureau.
This will, in turn, have a huge (and mostly negative) impact on your credit score. If by any chance your payments are late by 60 days or more, you will most likely lose your low balance transfer rate and also get charged a very high interest rate as the penalty. This can go up to 30% or more.
To avoid such instances, just make your payments automatic, so you will never have to go through all that hustle.
Make the transaction within 60 days
Always keep in mind that most balance transfer offers to start counting from the day you open the account and not from the day that the transfer was completed. These offers often last between 60 and 90 days. Therefore, once you open the account, make the transfer as soon as possible so as to take advantage of the offers available.
The main aim of getting a balance transfer credit card is to get you out of debt. Therefore, if you start spending on the credit card, you will get yourself deeper in debt. On top of that, you will be charged interest on your purchase balances.
If your credit card comes with a balance transfer rate of 0% yet it lacks a promotional rate of 0% on all of your purchases; then all your purchases will receive interest charges instantly until the day that you will pay up all of your balances. In other words, this means that you will immediately lose the grace period on the balance transfer. In conclusion, it is advisable to do research on the best 0 percent apr balance transfer credit cards so you can have an idea of which company to choose. Moreover, do not use two balance transfer credit card from the company.