Do Balance Transfers Revert to Cash Advances?
Yes, some do.
Credit card lenders offer low and zero interest balance transfers but only for an introductory period which may be as little as three months but is typically six months. Some fairly common longer terms are nine and twelve months. At the end of the low interest period interest rates will revert to either the standard purchases or cash advance interest rate for that particular card. Unless the low interest rate is for a life of balance transfer credit card. In this case the low interest rate will remain in place for the balance transfer portion of the credit, until the balance has been repaid in full. This is an excellent option for those with large outstanding balances on high interest rate credit cards. The negatives are generally a hefty annual fee.
Credit card lenders that offer very low interest rates on balance transfer credit cards only tend to do so on the balance form of credit. other forms of credit include: purchases and cash advances. If a credit card balance transfer is offered at a very low on 0 % interest rate then the purchases interest rate on the credit card will more than likely be charged at a higher interest rate. This interest rate will also tend to be charged for longer as almost all terms and conditions of balance transfer credit cards state that all repayments be paid toward a balance transfer until it has been paid in full. Sometimes interest free days will not be on offer for the new purchases until the balance transfer amount has been settled. This is why balance transfer credit cards should not be used for new purchases.
Some credit card providers offer very low interest rates for introductory periods, on which they can not hope to make a profit even credit card lenders offering instant approval credit cards partake in this practise. Introductory offers are offers that are made to attract customers, and this can include offers for balance transfers. An introductory offer is not meant to make money when it is first offered, however these offers have proven to be quite effective at attracting good credit card customers and are much cheaper than many methods of advertising and marketing.
One particularly common introductory offer for credit cards is to offer to transfer a balance from an old credit card on to the new credit card and to have the balance charged at a very low or even zero interest rate. After the introductory period ends the remaining balance on the balance transfer credit card will revert to a cash advance or standard purchases rate.
Cash advances are usually the balance that attracts the highest credit card interest rate. If the balance after the introductory rate reverts to a cash advance rate it would be best to ensure that the balance is minimal or transfer it to a new balance transfer credit card.
