Getting Ahead With Balance Transfer Credit Cards

In this world where plastic money is the rule and not the exception, many of us find ourselves juggling credit card balances. Each day we get at least one offer to transfer credit card balances to a lower interest rate or even 0%APR, in some cases.

But finding just which the best balance transfer credit cards are is often a case of doing your homework. The following checklist will help you decide which offer makes sense for you.

• Take a look at the interest rate on a transfer credit card: You will obviously choose the lowest rate you could get. Just make sure to check what the APR will be when the rates go up after the introductory period.
• Length of Introductory Period: Most credit card companies will only offer the lower interest rate for say 12 to 15 month then the rate goes up to a higher APR.
• Transfer fee: Nearly all balance transfer credit cards charge a certain percentage say 3% of the total to be transferred, although they will usually limit this to no more than $75
• Annual credit card fees: This varies from card to card, too, anywhere from $0 to $200 per year.

Take a good look at all of these points on each of your offers. While one card may offer 0% it may be for only 12 months then shoot up to 12% or more. Others will give you 4% on balance transfer over the life of the balance transfer but you will pay 12% or more on any purchases. So watch the fine print!

0 percent balance credit cards have an undeniable attraction but may catch the unwary applicant off guard. To gain the full advantage a 0% balance transfer credit card, you will need to know the length of the introductory period and the balance transfer fee, which are the two main features that set this kind of card apart from the rest.

First of all, note the length of the introductory period. Most last 12 months after which time the rates go up significantly. This higher rate will often be the going APR so you don’t know now what you will end up paying in the long run in the event you don’t pay off the balance before the rates go up.

Secondly, be aware that you will be charged a balance transfer fee of at least 3% of the total to be transferred, although there usually is a cap to that at between $75 – 90. Banks charge this up front and it will appear on your first statement.

A final comment is to write down on paper the various offers, listing the features and fees. That 0 percent balance transfer credit card does cost you money either up front with the 3% balance transfer fee or an annual credit card fee. It seems there is no such thing as a free lunch in the credit card business but if you do your homework you can significantly cut your long term costs.

So, why use a 0% balance transfer credit card? Well, let’s take a look at the savings over a typical credit card balance over 12 months as our example.

To find a no-fee balance transfer credit card, be prepared to do your homework – then read the fine print. It is rare to find a zero interest, no fee offer for the simple reason that banks are in business and businesses must make a profit. If they don’t charge you interest or don’t charge you a balance transfer fee, they will tack it on someway.

For the rare one that doesn’t charge you interest or a fee, they are gambling that you will not pay your balance off quickly and will make up the profit in interest charges after the introductory period.

So quite often you can find a no balance transfer fee credit card offer if you have a large balance on your credit cards. It is likely you won’t pay off the credit card within the introductory period so they will make up their profit later.

But for the very prudent, a no fee balance transfer credit card could save you a lot in interest and fees. If you are a determined type of person, this could be the best option when consolidating and paying off your credit cards.