Transferring Credit Card Balances

With so many card issuers offering low introductory interest rates or zero percent APR, many consumers desire to transfer their existing balances to these new accounts. It can be a great way to save money and pay back loans sooner. Some even make this practice a habit and roll debt over onto new cards each year. However, before opening an account to transfer credit card balances, there are a few things you should be aware of.

First of all, credit card companies are in the business of making money. Therefore, it is important to read the fine print about balance transfers before taking any actions. Often, there is a catch pertaining to balance transfers. Some companies charge steep fees for debts that are brought over from another account. Charges may fall somewhere around $20-$30 per transfer. Plus, some credit card companies will assess a fee for every $100 of the balance being brought to your new line of credit from an existing one. Obviously, this is counter productive if you are trying to save money.

In addition, many credit card providers charge a higher interest rate on balance transfers than they do on newly acquired debts. If your introductory rate is 1.5% for the first year, the balance of transferred debt can be over 18%. These terms often go unadvertised. Then, by the time the consumer figures out what is going on, it is too late. However, by law this information must be provided to potential credit card customers and can be discovered in the details of any credit card offer.

If you have read all the fine print and still feel that opening a new account and transferring balances will be advantageous, the process is fairly easy. Either online or in paper form, there will be several boxes asking for some general information about your current lender and the amount of debt you wish to transfer. Once you fill out the form, the credit card company takes care of the rest for you. Transferring credit card balances can be a great way to save money, as long as you have researched all terms carefully.