A low introductory rate on a new credit card can save you money in interest up front, but if the interest and penalty fees are high later on, it won't help you to build your cash reserve. Avoid introductory offers, unless they really will save you money in the long run that you can put into your cash reserve. Before signing up for an offer, look at the fees involved for transferring your current balance, if interest on purchases is separate than balance transfers (it usually is), and what the interest rate is.

Most companies will charge you some sort of fee to transfer a balance. Fees can range from a flat rate, like $100 for ever balance you transfer, or can be a percentage of the total you transfer. An average fee for balance transfers is 4% of the total with no cap on how much you transfer. If you are paying 10.70%, the average interest rate, on an $8000 credit debt and you are given an introductory offer on another credit card of 3.99% for the first year plus a 4% balance transfer fee, you will actually be paying $320 ($8000 x .04) in transfer fees and around $332 ($8320 x .0399) in interest in the first year, which is a total of $652. If you had stuck with your old card you would pay about $856 in interest, so the new card could be a good deal because you would be able to put just over $200 in your cash reserve in the first year. However, after the introductory rate is past, you're interest rate may jump back up to 16% or higher, which does not save you money in the long run.

If that $8,000 takes you eight years to pay it off making a minimum payment of $130 a month, you will be paying around $4,000 in interest on your old card with an interest rate of 10.70% and around $3800 on the new card with a 3.99% introductory interest rate, a 4% balance transfer fee and the same interest rate of 10.70% after the introductory period. That put $200 in your cash reserve over eight years (all in the first year of the balance on the new card). If the interest rate is any higher, you will be paying a lot more interest with the new card than with the old. For example, the same $8000 with the same introductory rate with a typical 16.67% interest rate after the introductory period is over will end up costing you around $8500 in interest and will take eleven years to pay off paying the minimum payment of $130 a month. That's $4500 in interest you could be putting in your cash reserve if you stick with your old card rather than going with a flashy introductory offer with high penalties later. If the interest rate after the introductory period is higher than what you are currently paying, you should not transfer your balance to the new card. Do the math over the entire life of your balance so you can see just how the offers measure up against what you currently have. If you find an offer that actually saves you money over the life of you debt, go with it and put what you are saving in your cash reserve.