Balance transfer cards can be a lifesaver if you have credit card debt you are trying to pay off. With a 0% introductory APR offer (range from 12-21 months), you can save money on interest and eliminate your debt quicker. However, your balance transfer card can quickly become a nightmare. All it takes is missing a credit card payment.
What Happens if You Miss a Payment?
Loss of 0% APR Promotional Offer - Most balance transfer credit cards contain a clause revoking the 0% introductory APR rate if you make a late payment during the promotional period. If you lose the introductory rate, the issuer will apply the regular APR rate to your remaining balance, Some cards may even charge you interest retroactively from when you opened the account. The terms vary by card with some cancelling after one missed payment while others only cancelling offer if you are more than 60 days late with your payment.
Late fees - When you make late payments, your card issuer may also elect to charge you a late payment fee. Late fees can cost up to $28 for the first offense and up to $38 if you are late again within the next six billing cycles.
Penalty APR - If you are more than 60 days late with your payment, the issuer will charge a penalty rate on your existing balance, which can be as high as 30%.
Credit Score impact - Generally, your credit score will not be impacted if you pay at least the minimum amount due within 30 days. If the late payment is recorded on your credit reports, it generally stays for seven years.
How to Avoid Missing a Payment
You should do everything possible to make sure you make your payment by the due date. Here are some steps you can take to avoid losing your balance transfer offer because of a late or missed payment:
Continue to make payments on your previous card until you receive confirmation your balance has been transferred to the new card.
Carefully review the card's terms and conditions to understand the consequences of making a payment past the due date or completely missing a payment.
Opt in to receive email or text notifications from your card issuer reminding you when future payments are due.
Set up automatic payments through your card issuer or with your checking account. Always pay at least the minimum payment due, but preferably more.
Select a card with flexible due date, enabling you to choose a payment due date that fits your schedule
Apply for a balance transfer card which waive the late fee for first time or do not charge a late fee at all.
Contact issuer to request a waiver if you have a good reason for missing your first payment. If you have never missed a payment and have a good credit score, the issuer may forgive the late fee once as a courtesy.
Balance Transfer Cards with Waived Late Fees
Some balance transfer credit cards waive late fees either once or all the time. Generally, these cards are only issued to cardholders with very good or excellent credit (those unlikely to miss a payment). Also, if your card waives late fees, you should not use it as an excuse to always pay late. You should only use it in extraordinary situations.
A late fee waiver does not mean you are immune from losing your introductory offer. Some cards will revoke to offer if you are more than 60 days late with your payment but read the card terms to understand when/if offer can be revoked. You may also be subject to penalty APR of 30% if your payment is late.
In addition, even if the fee is waived, your issuer may still report the late payment to the credit bureaus, negatively affecting your credit score.
Here are a few balance transfer cards which waive fee at least once:
- Citi Simplicity® Card - No late fees and no penalty rate
- HSBC Gold Mastercard® credit card - $0 for first missed payment within a 12- month calendar period. After that, up to $37. No Penalty APR.
- Discover it® Balance Transfer – waives first missed payment. After, up to $38
A balance transfer is supposed to help you get out of debt faster so you want to do everything you can to avoid losing your introductory rate by missing a payment. Read the credit card agreement to understand what terms you need to follow to keep your introductory interest rate. Don’t leave anything to chance - set up reminders and automatic payments. If you are someone who occasionally misses a payment, consider a card which is more forgiving of late payments. However, if you are constantly late with payments, a balance transfer credit card may not be the best option for you.