Balance transfers for dummy's (me) question?

[Sarah'sMomfrom PA]

I recently received an offer for a balance transfer which says it is 0% promotional APR and no fee on Balance Transfers through June 2019. After June 2019, we will be charged 9.99% APR. My question is the following: We have several small credit card balances which I would like to clear up and combine all of these balances into one lump sum and pay them off and then only have one monthly payment to the above balance transfer credit card--if I do this and take advantage of the 18 month period and put my entire monthly check on this (which I am currently doing anyway but just piecemeal on various accounts), would I be charged any interest only after June, 2019? I only ask this because when you look at the back of the balance transfer under "Paying Interest", it says, we will begin charging interest on Balance Transfers from the transaction date. Does this just mean that if I don't pay the amount back by June, 2019, they will charge me the interest that has accrued from day one? Sorry this is so long but this is my first time thinking about doing this! Thanks in advance!

 

[Marionnette]

I recently received an offer for a balance transfer which says it is 0% promotional APR and no fee on Balance Transfers through June 2019. After June 2019, we will be charged 9.99% APR. My question is the following: We have several small credit card balances which I would like to clear up and combine all of these balances into one lump sum and pay them off and then only have one monthly payment to the above balance transfer credit card--if I do this and take advantage of the 18 month period and put my entire monthly check on this (which I am currently doing anyway but just piecemeal on various accounts), would I be charged any interest only after June, 2019? I only ask this because when you look at the back of the balance transfer under "Paying Interest", it says, we will begin charging interest on Balance Transfers from the transaction date. Does this just mean that if I don't pay the amount back by June, 2019, they will charge me the interest that has accrued from day one? Sorry this is so long but this is my first time thinking about doing this! Thanks in advance!

If you do not pay off the balance before the end of the promotional period, you will be charged interest retroactive to the day that the balance transfer was executed. Interest will be based on the daily balances on the account and will compound just as if you made a large purchase using the credit card and paid it down with the monthly payments you made. You will also pay a "balance transfer fee", which tends to be anywhere from 3%-5% of the amount, or a set dollar amount - whichever is greater. That fee will be charged to your account at the time that the transfer occurs and is generally not included in the promotional rate. IOW, that transfer fee will be subject to interest from day #1. Your first payment on the account after the balance transfer will be applied to the transfer fee first and then any remaining payment will go toward the transferred balances.

 

[Sarah'sMomfrom PA]

Thanks for your response! This offer says specifically under fees: There are no fees for Balance Transfers associated with this promotional offer. That is why it caught my attention since the fees can be anywhere from 1% to 5%. It seemed like a good deal and we have had accounts with this bank in the past (but currently do not owe any credit cards balances to this bank).

So as long as I pay this off by June 2019, I should accrue no interest at all. I don't think that this is a bad deal!

 

[kymom99]

I think you understand correctly. Usually they send warnings on the statements about the deadline to pay it off.

 

[Marionnette]

I think you understand correctly. Usually they send warnings on the statements about the deadline to pay it off.

Every statement should show not only the remaining balance and the minimum payment, they should also show the interest that will be charged (to that date) if the promotional balance is not paid off by the deadline. It's also important to keep in mind that the deadline will most likely fall within a billing period. The balance must still be satisfied by that deadline and not on the day that the bill is otherwise due.

 

[supersnoop]

If you do not pay off the balance before the end of the promotional period, you will be charged interest retroactive to the day that the balance transfer was executed.

I disagree. What you’re describing is “deferred interest.” In this case, the interest rate is 0% during the promotional period. Interest at the higher rate would only be charged after the 0% rate expired, and only on the balance at that time.

 

[DLgal]

I disagree. What you’re describing is “deferred interest.” In this case, the interest rate is 0% during the promotional period. Interest at the higher rate would only be charged after the 0% rate expired, and only on the balance at that time.

Nope. The interest is 0% DURING the promotional period and ONLY if the balance is paid in full by the deadline. Every single credit card company that offers balance transfers states in the fine print that "interest begins accruing on the transaction date."

They are counting on a certain percentage of people failing to pay in full during the promotional period. They would have no incentive to offer balance transfers otherwise.

 

[descovy]

Nope. The interest is 0% DURING the promotional period and ONLY if the balance is paid in full by the deadline. Every single credit card company that offers balance transfers states in the fine print that "interest begins accruing on the transaction date."

They are counting on a certain percentage of people failing to pay in full during the promotional period. They would have no incentive to offer balance transfers otherwise.

The bolded is true. But what you miss is that "typically" the interest rate is 0% until X date.
Could be 0%, could be 1.5% depending on the offer. So yes, you are accruing interest. At the rate of 0%. Which happens to be $0. tomato-tomato.

Then it becomes 9.99% after a certain date.

I've done these balance transfers a handful of times in my adult life. Like the OP, I look to pay it off by the deadline. Sometimes the ad says "Until Jan 1, 2020" But that final bills due "Jan 19, 2020." You want to know what really happens? You pay like a dollar or 2 in 9.99% apr for that final month. Nothing scary at all.

Typically store cards, furniture stores etc... have deferred interest. That's where you better pay in full by Jan 1.

But typically credit card offers are not offering deferred interest like a furniture store. Just a low rate.

I'll say "typically" because We can't see the OP's offer. Maybe she did get the one really crappy credit card offer that offers deferred interest. But not likely.

 

[descovy]

I disagree. What you’re describing is “deferred interest.” In this case, the interest rate is 0% during the promotional period. Interest at the higher rate would only be charged after the 0% rate expired, and only on the balance at that time.

This is correct. (In most balance transfers at least)

OP, best to call the credit card company. As you can see here, you are not going to get a clearcut answer.

 

[seashoreCM]

Other pitfalls:

* If you forget to make a payment on time during the process then the entire loan might be refigured with normal high interest from day one.

* If you had charged other things or cash advances on that credit card, then those balances may remain untouched and rack up their normal high finance charges while you are making payments towards the promotional balance transfer. You could not make bigger monthly payments all along to get rid of those other balances sooner.

 

[Marionnette]

Other pitfalls:

* If you forget to make a payment on time during the process then the entire loan might be refigured with normal high interest from day one.

* If you had charged other things or cash advances on that credit card, then those balances may remain untouched and rack up their normal high finance charges while you are making payments towards the promotional balance transfer. You could not make bigger monthly payments all along to get rid of those other balances sooner.

True for the first statement. Untrue for the second. Credit card companies are required by law to apply payments in the order of highest interest to lowest. Any balances due to new purchases made with the card would be credited before a payment is applied to the promotional rate.

 

[supersnoop]

Nope. The interest is 0% DURING the promotional period and ONLY if the balance is paid in full by the deadline. Every single credit card company that offers balance transfers states in the fine print that "interest begins accruing on the transaction date."

They are counting on a certain percentage of people failing to pay in full during the promotional period. They would have no incentive to offer balance transfers otherwise.

Nope; not on most credit cards. That's how some store cards have worked in the past, but that's on purchases, not on balance transfers. In fact, I can't find a single balance transfer offer that works they way you describe.

 

[DLgal]

Nope; not on most credit cards. That's how some store cards have worked in the past, but that's on purchases, not on balance transfers. In fact, I can't find a single balance transfer offer that works they way you describe.

I stand corrected. I always pay my balance transfers in full on time, but I always thought since it says "balance transfers begin accruing interest on the date the payee accepts the check," that interest was accruing and would be charged if the balance wasn't paid on time.

 

[aliceindisneyland]

If OP is looking at Chase Slate, I have that card and interest only starts if there is still a balance once 0 percent is over, and will only charge interest on the remaining balance. Slate doesn't charge a balance transfer fee; that is why I wonder if that is the card you're looking at.
If it's a different card, which one? I hate paying balance transfer fees!

 

[Dentam]

Sounds like a great plan if you think you can pay off the balance before the 0% rate goes away! No fee is pretty nice and not easily found!