credit card's transfer balance: how does it work?

[andylawcc]

let's say I have 2 credit cards: card A and card B.
i have a balance of $100 in card A and $0 in card B.
so I can transfer all the $100 from card A to card B right?
so what if the due date is coming near for card B and I transfer it back to card A, and repeat the process for card A when the due date comes, I never have to pay my bill?????

yes, I know it doesn't work like that, so how does it really works?

 

[gururu]

it works like that, but you generally have to pay a transfer fee. That will eat you alive.

 

[brtspears2]

Something like that, plus an insane fee of usually 3% of the total, $5 min fee, or max $50. Interest accures INSTANTLY.

Sure you can play pong with your balances, but eventally you will run out of credit and be up sh!t creek in interest and fees.

 

[CPA]

Originally posted by: andylawcc
let's say I have 2 credit cards: card A and card B.
i have a balance of $100 in card A and $0 in card B.
so I can transfer all the $100 from card A to card B right?
so what if the due date is coming near for card B and I transfer it back to card A, and repeat the process for card A when the due date comes, I never have to pay my bill?????

yes, I know it doesn't work like that, so how does it really works?

nice try, but the cards will hit you with a transfer balance fee and may access interest on the 1st day of balance (similar to a cash advance). You may not have to pay, but you will quickly increase your amount.

 

[andylawcc]

ahh ha. thanks guy.

so interest on 1st day huh? that must be a killer. compound 9.99% daily... ouch!

 

[DaWhim]

KISS - Keep It Simple Stupid

 

[royaldank]

For a year or two, the wife transfered her balanace every 6 months. She would get a 0% for 6 months with balance transfer notice. Then she'd move it. 6 months later before that turned into 2x% interest, she'd just transfer it to a new card. Finally paid it off and her credit score didn't really suffer at all.

 

[DBL]

Originally posted by: CPA
nice try, but the cards will hit you with a transfer balance fee and may access interest on the 1st day of balance (similar to a cash advance). You may not have to pay, but you will quickly increase your amount.

You can do this successfully for a short time, although you would need to have substantial balances, making the transfer fees miniscule in comparison. I have done this with AMEX for one year then transferring to Discover for another year, all at 0%. Total balance transfer charges have been about $80. This is 1.6% of my average balance over 2 years. In the meantime, you can open an ING account, depositing your would-be payments (over the required minimum) to this account earning >= 2% interest. Not a huge difference but it can a financially prudent thing to do, especially if you already have most of the balance owed liquid, which can accrue interest immediately at ING.

However, read the fine print carefully on the balance transfer offers.

 

[blahblah99]

Originally posted by: royaldank
For a year or two, the wife transfered her balanace every 6 months. She would get a 0% for 6 months with balance transfer notice. Then she'd move it. 6 months later before that turned into 2x% interest, she'd just transfer it to a new card. Finally paid it off and her credit score didn't really suffer at all.

That's what I'm doing... even though there's a transfer fee, it's usually no more than $60-80 (they can only charge you a max of about that much). On a $10,000 balance I used to buy my car, I've been paying it off over the last few years with 0% for the first year and a half, and it's sitting at 2.99% right now, all with only about $200 interest + balance transfer fees.

 

[Aztech]

I've run to the 0% interest rates several times. Most of the time, I search for the best deal on a card, keeping in mind intro rate period, fixed rate thereafter, rewards, etc. I've had many offers that waive the balance transfer fee. My latest move was a $10,000 transfer to a card that's giving me 0% intro rate for one year on BOTH transfers and new purchases. Now, I just need to stay away from Hot Deals and pay this off and then move to a rewards card.

 

[kranky]

One point that hasn't been made yet is that you can't rely on that strategy to avoid ALL payments. You can't control when company B will send a check to company A (which is how the balance actually gets transferred - when you transfer from A to B, B pays A and adds the amount to your balance at B.) Since you can't dictate the timing, you still have to make your minimum payment just to make sure your account doesn't become delinquent.

 

[randomlinh]

Originally posted by: blahblah99

Originally posted by: royaldank
For a year or two, the wife transfered her balanace every 6 months. She would get a 0% for 6 months with balance transfer notice. Then she'd move it. 6 months later before that turned into 2x% interest, she'd just transfer it to a new card. Finally paid it off and her credit score didn't really suffer at all.

That's what I'm doing... even though there's a transfer fee, it's usually no more than $60-80 (they can only charge you a max of about that much). On a $10,000 balance I used to buy my car, I've been paying it off over the last few years with 0% for the first year and a half, and it's sitting at 2.99% right now, all with only about $200 interest + balance transfer fees.

wow... i would think doing all that would hurt your credit report... hence why I just drop all my offers for 0% (that and the fees would kill me, I don't have enough to warrant it... and no one is giving me free transfers)

 

[Night201]

Sometimes it takes more than 30 days or so for the transfer to happen so that you can't keep going from card to card every month.

 

[Mallow]

Here is the one catch for transfering balances!!!!!!!!

When you transfer a balance they tell you you won't pay interest for some period of time. However, many of the cards will have normal interest on other charges monies. When you make your first payment you know which pile of money the payment goes to? The transfer balance which has no interest. You can't pay off your normal credit card bill until you pay off the transfer. This usually means you will be accuring interest on your normal everyday charges.

This is how this scam used to be a couple years ago, they might have changed it for certain companies these days. Let me know what y'all think.

 

[dullard]

Originally posted by: Mallow
When you transfer a balance they tell you you won't pay interest for some period of time. However, many of the cards will have normal interest on other charges monies. When you make your first payment you know which pile of money the payment goes to? The transfer balance which has no interest. You can't pay off your normal credit card bill until you pay off the transfer. This usually means you will be accuring interest on your normal everyday charges.

This is how this scam used to be a couple years ago, they might have changed it for certain companies these days. Let me know what y'all think.

Yes that is how it usually works. There is one very easy solution. Use one CC for transfers and another for purchases. Simple solution and you have no problem.

I am fundamentally against CC transfers though (due to the fees you are often charged and due to the fact that you are living beyond your means).

 

[Mallow]

Originally posted by: dullard

Originally posted by: Mallow
When you transfer a balance they tell you you won't pay interest for some period of time. However, many of the cards will have normal interest on other charges monies. When you make your first payment you know which pile of money the payment goes to? The transfer balance which has no interest. You can't pay off your normal credit card bill until you pay off the transfer. This usually means you will be accuring interest on your normal everyday charges.

This is how this scam used to be a couple years ago, they might have changed it for certain companies these days. Let me know what y'all think.

Yes that is how it usually works. There is one very easy solution. Use one CC for transfers and another for purchases. Simple solution and you have no problem.

I am fundamentally against CC transfers though (due to the fees you are often charged and due to the fact that you are living beyond your means).

I quite agree about the living beyond your means... but sometimes emergencies happen and people need the quick money so I try not to judge.

However, most people don't know it works like this so they won't have the two credit cards as you suggest, which is definitely the best solution. Hopefully now a couple people will know

 

[cronos]

Originally posted by: Mallow
Here is the one catch for transfering balances!!!!!!!!

When you transfer a balance they tell you you won't pay interest for some period of time. However, many of the cards will have normal interest on other charges monies. When you make your first payment you know which pile of money the payment goes to? The transfer balance which has no interest. You can't pay off your normal credit card bill until you pay off the transfer. This usually means you will be accuring interest on your normal everyday charges.

This is how this scam used to be a couple years ago, they might have changed it for certain companies these days. Let me know what y'all think.

yes. i figured that out too just a few days ago, *after* i agreed to transfer my balance from one card to another. but i only have small amount of balance before the transfer for that card, and i never use that one for purchases anyway, so it's not a big difference for me.

 

[Doggiedog]

Originally posted by: Mallow
Here is the one catch for transfering balances!!!!!!!!

When you transfer a balance they tell you you won't pay interest for some period of time. However, many of the cards will have normal interest on other charges monies. When you make your first payment you know which pile of money the payment goes to? The transfer balance which has no interest. You can't pay off your normal credit card bill until you pay off the transfer. This usually means you will be accuring interest on your normal everyday charges.

This is how this scam used to be a couple years ago, they might have changed it for certain companies these days. Let me know what y'all think.

Bingo!

You are exactly right. They did that to me a while back convincing me to transfer. When I found out I had to pay my 0% stuff first bf the higher interest stuff, it ticked me off because I didn't need to really transfer.

 

[Kntx]

Originally posted by: andylawcc
let's say I have 2 credit cards: card A and card B.
i have a balance of $100 in card A and $0 in card B.
so I can transfer all the $100 from card A to card B right?
so what if the due date is coming near for card B and I transfer it back to card A, and repeat the process for card A when the due date comes, I never have to pay my bill?????

yes, I know it doesn't work like that, so how does it really works?

I've done this a bunch of times and never had any balance transfer fees. Seems lots of people are saying that it is pretty common practice though.

My CC company sends me these checks, that you can use exactly like normal checks except that they are charged to your CC account. You can do whatever you want with the checks, eg... pay bills, pay off other cc's, etc. The interest works the same as a purchase, which means the interest won't start till the end of the current month. If you have 2 CC's that give you these checks, and as long as you have enough of them you can bounce it back and forth as many times as you want.

 

[dullard]

Originally posted by: Kntx
My CC company sends me these checks, that you can use exactly like normal checks except that they are charged to your CC account. You can do whatever you want with the checks, eg... pay bills, pay off other cc's, etc. The interest works the same as a purchase, which means the interest won't start till the end of the current month. If you have 2 CC's that give you these checks, and as long as you have enough of them you can bounce it back and forth as many times as you want.

You have to be careful, very careful doing that. Most CC checks charge interest the day they are cashed AND charge you an upfront fee depending on the size of the check. Rossman tells us that a few don't have those charges, but the vast majority do. Yes with caution you can avoid it, but just be careful.

For example a 0%, no fee balance transfer offer for 6, 9, 12 months does not mean you can transfer balances for 0% and no fee anytime within that period. No, instead you have a very small timeframe in which you can do so.

 

[andylawcc]

informative thread :thumbsup:

 

[alkemyst]

Even IF there were / are no fees to transfer, it's the same as skipping a payment as no interest is paid on the original balance....you then get 0% for a year or whatever....perhaps you can then transfer again...still you will run out of 0% possibilities as most of these are to intise new members and not as easy to get as an existing customer (except in combo with a line increase and your old debt now continues to grow).

The checks you get are almost always available on request. The thing is they are only 0% for a usually 1-2 month window. Then they fall into the normal cash advance criteria usually.

 

[blahblah99]

Originally posted by: Mallow
Here is the one catch for transfering balances!!!!!!!!

When you transfer a balance they tell you you won't pay interest for some period of time. However, many of the cards will have normal interest on other charges monies. When you make your first payment you know which pile of money the payment goes to? The transfer balance which has no interest. You can't pay off your normal credit card bill until you pay off the transfer. This usually means you will be accuring interest on your normal everyday charges.

This is how this scam used to be a couple years ago, they might have changed it for certain companies these days. Let me know what y'all think.

I'm fully aware of that scam... Hence, on the card that I transfer balances TO, I make sure that there are no balances on there to begin with, and make sure that there are no future transactions on that card until the balance is paid off.

And why would that hurt your credit score? As long as you're not accumulating debt and paying it off, I don't see why it's negative.

 

[RossMAN]

If you know where to look ...

CitiBank is offering NEW customers:

• Free Online Services
• Free Photocard available
• VISA or MasterCard card member benefits including FREE 1 year extended warranty
• Virtual Account Numbers (1 time use cc's which Amex discontinued)
• 0% APR on balance transfers for 12 months (yes I know the web site says 9)
• 5% rebate on supermarket, drugstore, and gasoline purchases
• 1% rebate on all other purchases
• No Annual Fee

I don't have the info with me but I can get it tonight if anyone is interested. Just PM me your name and e-mail address.

 

[Sketcher]

Originally posted by: Mallow
Here is the one catch for transfering balances!!!!!!!!

When you transfer a balance they tell you you won't pay interest for some period of time. However, many of the cards will have normal interest on other charges monies. When you make your first payment you know which pile of money the payment goes to? The transfer balance which has no interest. You can't pay off your normal credit card bill until you pay off the transfer. This usually means you will be accuring interest on your normal everyday charges.

This is how this scam used to be a couple years ago, they might have changed it for certain companies these days. Let me know what y'all think.

Yep. The rude awakening to this brick wall is what prompted me to get out of credit card debt period. Interesting, when you're in debt - adding on more is no big deal 'till it slams you into reality. However, being out of debt - you're acutely aware of anything that incurs debt and you tend to save to afford things and bide your time. Yeh, I know; I said "Save to afford" things. That's akin to blasphemy around here.

But, I'm debt free, am paying into investments and savings rather than being a slave to CC's and ALL my purchases are much more enjoyed .