What Is the Catch to a Balance Transfer? Understanding Fees and APR Changes
Learn about the hidden costs of balance transfers, including fees and temporary low APR periods, to make informed credit card decisions.
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The catch to a balance transfer is primarily the balance transfer fee, which is usually 3% to 5% of the total amount transferred. Additionally, the low or 0% introductory APR offered is temporary, typically lasting 12 to 18 months. After this period, the APR may rise significantly, impacting the cost of any remaining balance. It's crucial to read the fine print and ensure the long-term benefits outweigh these immediate costs.
FAQs & Answers
- What fees are associated with a balance transfer? Balance transfers usually come with a fee of 3% to 5% of the amount transferred, which should be factored into the overall cost.
- How long does the introductory APR period last on balance transfers? Introductory APR periods for balance transfers typically last between 12 to 18 months before the rate increases.
- What happens after the low APR period ends on a balance transfer? After the introductory period, the APR often rises significantly, which can increase the cost of any remaining balance.
- How can I benefit from a balance transfer without extra costs? To maximize benefits, ensure the savings from the low APR outweigh the balance transfer fees and pay off the balance before the higher APR begins.