Credit Cards for Bad Credit - Balance Transfer Secrets You Can't Ignore

It's not uncommon to see applications in the mail from credit cards for bad credit offering low interest if you'll transfer balances from another card. You might be tempted to take advantage of a fantastic offer, but before you do, it's important to research the fine print of the card's terms and conditions. As the competition among card issuers increases, many have raised their fees and modified their terms and conditions.

Take the time to study the secured card's balance transfer terms and conditions. Many card companies structure their payment policies to yield the most profit. For example, let's say you're given a 0% APR on transferred balances and a 12% APR on new purchases. In order to maximize its profits, the bank will apply your payments to the transferred balance first because it isn't receiving interest from the 0% APR. Meanwhile, it receives 12% APR interest from your new purchases.

Let's study three simple solutions to minimize your balance transfer fees:

1) Keep New Purchases Separate

One strategy to minimize your transfer costs is to use the new secured card exclusively for paying off the tranferred balance. Make all new purchases on another existing card. By making the minimum required payments during the 0% APR period, you can use the remaining money to pay down other high interest cards. You could even set aside the extra money to pay off the balance transfer before interest charges kick in.

2) Don't Transfer Old Debt

When a card company approaches you with an offer to balance transfer an old past due debt to a new credit card for bad credit, don't do it. This is a ploy by the company to collect on your old debt. If your debt is really old, it may qualify to be uncollectable according to your state's statute of limitations code. Check your state's statutes to be sure. If you accidentally agreed to transfer an old debt, contact the card company and tell them you were never warned about the transfer. Demand the company remove the debt transfer and cancel the card.

3) Hidden Transfer Fees

The last card transfer secret you need to be aware of is the balance transfer fee. Even though you're offered a 0% APR, most secured cards charge you a flat fee or a percentage (as high as 5%) of the balance transferred. Be sure you study the terms and conditions of the card to avoid any unexpected fees. You should also be aware that balance transfer APR's are typically higher with credit cards for bad credit.

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