Balance Transfer Credit Cards – 5 Things To Consider

If you’ve got a balance on a high interest credit card or cards, it may look very attractive indeed to take advantage of one of those 0% intro APR, free balance transfer credit cards offers you see.

Balance transfer credit cards can be a great way to reduce your debt load instantaneously, because they offer you the ability to transfer the balances from your high interest credit cards to one with a much lower interest rate. Once transferred, the idea goes, you pay the zero or low interest credit card off without having to rack up further interest charges while you do so, at least for up to 15 months or whenever introductory rate ends.

Great idea, right? Actually, yes, but there are some caveats to consider if this is something you decide you want to do.

Balance Transfer Credit Cards

1. Check your creditworthiness and make sure you’re eligible

If you’ve got very good credit, you’ll be eligible for balance transfer credit cards’ amenities, but if you don’t, it may be off limits to you anyway. Alternatively, you may be offered a lower introductory rate than what you pay on your current credit card. This may still mean savings, of course, but it’s not going to be an interest-free proposition.

2. Don’t rack up more credit card debt

Don’t go shooting yourself in the foot by transferring all of your high interest credit card debt to zero or low interest credit cards, only to then rack up even more debt. Remember, you’re using balance transfer credit cards so that you can pay off your debt without having to incur further interest charges on that debt.

3. Make sure both balance transfers and purchases are offered at 0% interest

You’ll have to read the fine print here, because many cards will “tease” you by saying that you can have 0% interest on balance transfers, but you’ll still pay interest charges on any purchases you make on that card. Remember, when you do credit card balance transfer, the card you transfer to should have both 0% interest on balance transfers, and 0% interest on purchases for the life of the intro rate.

Another way these balance transfer cards can get you is that they’ll offer 0% balance transfer rates, but they won’t let you pay off higher interest rate charges (new purchases) UNTIL you’ve paid off the debt transfer. So be careful, make sure both new purchases AND balance transfers are offered at 0% for the life of the introductory rate.

4. Make sure balance transfer credit cards are truly free

Again, read the fine print on any balance transfer credit cards you’re considering. Some credit card companies, for example, will charge you fees to transfer each balance (if you’re transferring more than one) to the card you’ve chosen. Make sure you are ABSOLUTELY doing a 0% interest rate, zero transfer fee before you jump on board.

5. Remember, the intro rate expires

All good things must come to an end, and that includes that enticing 0% interest rate that got you to sign up for this card in the first place. Therefore, make sure you know when the grace period ends. Either plan to have all of your credit card balance paid off at that time, OR make sure you shop around and get a new deal for another 0% interest balance transfer credit cards lined up so that you can make the switch in time.

Be careful of hopping around too much from credit card company to credit card company, though; this will hurt your credit score in the long run, so you should only use this as a short-term stopgap until you get your debt paid off.