Zero Rate Credit Card Balance Transfer Offer Rip Offs
June 16th 2009 00:51
Zero Rate Credit Card Balance Transfer offers are generally a rip off with most consumers paying more, not less interest when they take up a so called low rate card with zero interest on balance transfers from other cards. However used properly the best deals in the market can save consumer thousands of dollars.
Statistics from the Reserve Bank of Australia analysed by research company Infochoice, indicate that people with a card debt of $10,000 can save up to $4300 by using the balance transfer offers now in the marketplace.
However most people usually end up paying more because they are being caught out by myriad complex terms, conditions and loopholes which are often only disclosed in long legal contracts.
For example, what is not prominently revealed is the interest rate you will be charged once the promotional period runs out - which is often the cash advance rate, bot the headline purchase rate.
Also not highlighted is that there is often no interest-free period on new purchases, while any part of the transferred balance remains unpaid.
And interest on these new purchases can keep accruing for months or years because you can't pay them off until after the transferred balance is paid off in full.
Another trap is the deal is off if you miss a monthly repayment on some cards and the whole balance starts earning interest at a higher rate.
Ironically, experts say it is the lowest-rate credit cards that contain some of the biggest traps for the unwary.
That low-rate card with the zero per cent balance transfer rate could actually be costing you a lot more than a premium gold or platinum card with a big annual fee and lots of bells and whistles attached.
"I would say for every person who is getting a real financial benefit from the zero rate balance transfer offers, there are at least two who are not," says Mike
Jarocki, spokesman for credit card research website creditcardfinder.com.au.
"Most people are ending up paying a lot more," he says.
Statistics from the Reserve Bank of Australia analysed by research company Infochoice, indicate that people with a card debt of $10,000 can save up to $4300 by using the balance transfer offers now in the marketplace.
However most people usually end up paying more because they are being caught out by myriad complex terms, conditions and loopholes which are often only disclosed in long legal contracts.
For example, what is not prominently revealed is the interest rate you will be charged once the promotional period runs out - which is often the cash advance rate, bot the headline purchase rate.
Also not highlighted is that there is often no interest-free period on new purchases, while any part of the transferred balance remains unpaid.
And interest on these new purchases can keep accruing for months or years because you can't pay them off until after the transferred balance is paid off in full.
Another trap is the deal is off if you miss a monthly repayment on some cards and the whole balance starts earning interest at a higher rate.
Ironically, experts say it is the lowest-rate credit cards that contain some of the biggest traps for the unwary.
That low-rate card with the zero per cent balance transfer rate could actually be costing you a lot more than a premium gold or platinum card with a big annual fee and lots of bells and whistles attached.
"I would say for every person who is getting a real financial benefit from the zero rate balance transfer offers, there are at least two who are not," says Mike
Jarocki, spokesman for credit card research website creditcardfinder.com.au.
"Most people are ending up paying a lot more," he says.
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