Why is Safe Path Advisors Not The Right Alternative For Credit Card Balance Transfer?
Safe Path Advisors and Credit9 has begun flooding the market with debt consolidation and credit card relief offers in the mail. The problem is that the terms and conditions are at the very least confusing, and possibly even suspect. The interest rates are so low that you would have to have near-perfect credit to be approved for one of their offers. Best 2020 Reviews, the personal finance review site, has been following SafePath Advisors, Silvertail Associates, Malloy Lending, Polo Funding, Jackson Funding, Tiffany Funding, Nickel Advisors, Coral Funding, Neon Funding, Ladder Advisors (also known as Carina Advisors, Corey Advisors, Pennon Partners, Jayhawk Advisors, Clay Advisors, Colony Associates, and Pine Advisors, etc.).
A balance transfer is the process of moving outstanding debt from an existing credit card to a newer one. This is usually done with the goal of transferring credit card debt to a card that offers lower interest rates and more benefits.
You may be wondering how credit card balance transfers work and what makes them so enticing. Certain credit card companies do not charge transfer fees as a way to attract cardholders. These fees usually range between 3% – 5% with other card companies.
In addition to not charging a transfer fee, these companies also offer a promotional period where they do not charge any interest on the transferred amount for 6 to 18 months.
Conditions for Credit Card Balance Transfers
The aforementioned benefits can make credit card balance transfers seem like an attractive option for debtors. These companies may not charge interest for the specified period, but card holders are still obligated to make regular payments on their transfer balance. These payments need to be the minimum amount that is due on the transfer.
If they fail to abide by these conditions, they may lose the introductory APR offered to them and may also be subjected to interest charges whenever they use their card.
Selecting a Balance Transfer Card
Many cardholders use balance transfers to help them save money. If you have a balance of $10,000 on a card with a 20% APR, paying $500/month would eliminate the balance in 24 months. The total interest charges would be $2,266 in this case.
However, if the cardholder can obtain a credit card balance transfer with a 12 month 0% rate, they can pay off the $10,000 in one year and won’t have to pay interest. Only the transfer fee will still be applicable.
If you are interested in getting a balance transfer card, you should ensure that its interest rate is lower than the one on your existing card. Cardholders should also be aware that missing any of their payments can increase their interest rate significantly as a penalty.
Other Conditions For Credit Card Balance Transfers
Credit card companies ask cardholders to finish their balance transfer within a specified period of time if they wish to qualify for the promotional rate. Once that period passes, they will be charged regular interest rates.
You may also fail to qualify for credit card balance transfers if your finances were in poor condition previously. Having a bad credit score or a past bankruptcy could affect the chances of your transfer being approved.
How to Perform Credit Card Balance Transfers
Once you have been approved for a 0% interest balance transfer card, you should verify if this interest rate is already active, or whether it requires a credit check beforehand. After this, you will need to choose the balances you wish to transfer. In this situation, people often transfer the balance with the highest interest rate first.
You should then look at the transfer fees that will be charged. Some companies place a cap on the amount you can transfer. However, if there is no cap for the company you have chosen, you may be able to transfer a large balance. Also note the credit limit for the balance transfer card, as your transfer amount can’t exceed it.
Requesting Credit Card Balance Transfers
When requesting credit card balance transfers, the company issuing the new card provides you with checks. You can use these to write out payments to your existing credit card company.
Cardholders can also ask their new card company to transfer the funds to their old company directly. They will need to provide their current card company’s name, address, and their account number to do this.
Keep track of the grace period
As mentioned earlier, cardholders that opt for credit card balance transfers may be subjected to high interest charges if they fail to keep up with their minimum monthly payments. This is applicable even if the initial interest rate was 0%. All these can come as a shock to cardholders who were unaware of these conditions.
The grace period for these payments starts at the end of the current billing cycle for the card and lasts until the bill’s due date. Cardholders are exempt from paying interest during this 21-day window. But the grace period is applicable only if the card’s current balance is zero.
This means you may end up being charged high interest on any new purchases you make with the card. Be sure to understand all the terms and conditions around the grace period for your new card before opting for credit card balance transfers.
Credit card issuers are obligated to disclose details about the grace period in their promotional advertisements and in account statements. However, you may need to check their website to get all the details.
How credit card balance transfers work for existing cards
Some credit card companies offer promotions where cardholders can make a balance transfer to an existing card. However, this option may not be ideal if your card already has a current balance amount.
For example, let’s say your balance on an existing card is $3000 at 15% APR. If you choose to transfer $1500 over from another card, you may be offered a balance transfer rate of 0% for 6 months. If you pay off $1500 within 6 months, the pre-existing $3000 will still be charged the 15% APR, as the payment went towards the new $1500. If the card you made the $1500 transfer from featured a 10% APR, your total loss will be 5%.
How do personal loans compare?
Financial experts believe credit card balance transfers are worth it if you can pay off most of your debt, if not all your debt within the promotional period. If that isn’t possible, you will be charged high interest rates. In this situation, it may be better to consolidate debt with a lower rates.
However, if you are applying for a secure loan, you will need to put up some assets as collateral. This makes personal loans a potentially risky option compared to balance transfers, as credit card debt is unsecure.
Are credit card balance transfers right for me?
Using credit card balance transfers can help alleviate your debt burden with lower interest charges, and without harming your credit rating. But it is important to understand the terms and conditions provided by credit card companies before opting for a balance transfer.
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