Most of the time I highlight the good qualities of credit card balance transfers. After all, they are designed to save credit cardholders money, so there is plenty of good to speak of.
But there are some balance transfer drawbacks, which I’ve highlighted on this blog as well.
One thing I haven’t mentioned specifically or explicitly is that there is no grace period on a credit card balance transfer.
This is similar to a cash advance, but unlike traditional credit cards, which have a grace period.
[What credit score is needed for a balance transfer?]
Balance Transfers Charge Interest Immediately
When you elect to transfer a balance from one credit card to another, it will begin accruing interest on the date the balance is actually transferred to the new card issuer.
In other words, the finance charges start racking up immediately.
This differs from traditional credit cards in which you don’t carry a balance, where you get “X” number of days after each billing cycle to make the full payment to avoid being charged any interest.
*For the record, if you carry a balance on a standard credit card from month to month, your grace period is nullified as well. So always try to avoid carrying a balance!
It’s important to note this distinction to avoid any surprises when executing a credit card balance transfer. It could throw off your math slightly.
But it’s not necessarily a hugely negative thing. First off, if you’re transferring a credit card balance from a high-APR credit card, your interest rate will go down immediately as well.
So instead of being subjected to say 19.99% APR, your new interest rate may be only be 3.99% for the life of the balance.
Yes, you’re charged interest right when the balance is transferred, but your interest rate drops significantly. In other words, you still win and save lots of money.
[See: No fee balance transfer credit cards.]
0% APR Balance Transfer Makes It Awash
Of course, if you get your hands on a 0% APR balance transfer, there won’t be any interest charged for the initial promotional period, which could be 15 months or longer.
As a result, you won’t need to worry about the fact that there isn’t a grace period. If the APR is set at zero anyways, there won’t be any interest charged.
So it’s not a huge concern, and not an issue at all on most balance transfers, which tend to come with 0% APR for the first year.
Read more: Can you balance transfer a cash advance?