Yes, you can do a balance transfer from someone else's credit card, but there are a few caution signs you need to pay attention to before you jump into it. Like just about everything else in life, doing a balance transfer to help somebody out has its risks. But if it is done carefully and with prior planning and wariness, it can be beneficial to both that person and to you.
The most obvious beneficiary is the person you are allowing to transfer the balance to your credit card. Most likely, they have run into a credit card that has extremely high interest rates, leaving it impossible for them to make payments from month to month, much less make any progress in paying down the principle. Getting a balance transfer from their credit card to yours is beneficial to them if you have good interest rates because they can pay off their debt more quickly, and save a load of money that they would have had to spend on extra interest.
If you have researched this person's credit history and have found that they have a great credit history, a balance transfer can be helpful to you to in the fact that their future spending with the credit card that you are both on, or that they are using along with you, they will portray good credit spending habits that benefit your credit history as well. Having someone else with a good credit reputation to lean on is a great way for you to build your credit score and earn some bonus marks on your report.
The most obvious risk you would be taking when doing a balance transfer in order to help someone else out with their high interest rates is that you get someone that will hurt your credit. When considering a balance transfer from someone else's credit card, it is important to recognize this person's spending habits, payment habits, and their ability to pay their debt. Even if it is someone you love and who you know cares about you, that does not always change the fact that they may not be able to get rid of their bad credit habits.
Usually, people who have high interest rates did not get them for no reason. Many people start out with great interest, but because of late payments and poor management of their credit, their credit card companies boost their interest rates. Because this person has had this happen to them before, it is very likely that it will happen to them again... even on YOUR credit card.
The important thing to remember is that when you are thinking about doing a balance transfer from someone else's card, get to know that person better. You have to know that you can trust that person to not hurt your credit. You don't want their bad credit habits to be heaped on your credit report, and you don't want to be stuck with making payment that they cannot along with your own payments.
Transfer Balances Credit Cards
Credit card terminology these days has become rather complicated and credit card users should understand some of the key terms that are used, and exactly how they influence the charges associated with the cards use. Incentive programs, interest rates, compounding methods all combine to make the use of a credit card a potentially costly experience.
The first term that is very important when it comes to credit cards is “Annual Fee”. Some credit card companies charge more then just interest. Some card companies charge a fee, paid annually to the card holder just for the privilege of having the card. This charge is applied to the card, even if the card is not used. This fee may rage any where from $5.00 to $300.00 and is usually only found on credit cards that are tailored to the very high end market.
Another common term used by the credit card companies is “Introductory rate” or “Intro rate”. This term will be found on credit cards that are offering discounted interest rates as an incentive to the buyer to accept on of these cards. Usually this rate is substantially below the regular interest rate charged by the credit card company. Often this rate is valid for a limited time period and once it expires the regular rate applies. Those considering this type of credit card should be very sure that they are aware of what the actual rate on the credit card will be after the offer's expiry date. It is quite common for people to get trapped by running up a credit card on a large purchase thinking they will pay it off in a short period of time, and then get quite a surprise once the interest rate jumps back to the normally charged rate.
Many credit card companies encourage users to transfer the charges off their existing credit cards onto those of the new card. Usually this is offered or encouraged when the credit card has a low introductory interest rate. The credit card holder should be very careful and read the fine print to make sure they are not going to be charged a fee for this privilege. Often credit card companies have a “Balance transfer fee” that they charge to their customers when ever they consolidate the balances of all their other cards. This fee is often more money then would be saved by taking advantage of the lower interest rate.
Credit cards are a wonderful and convenient financial tool when they are used wisely. Making sure that the card holder has a complete understanding of the card, will guarantee this financial tool is used properly and the risk of financial hardship will be reduced.
