A credit card balance transfer is self-explanatory. You transfer a balance from one credit card onto another. The reason this is done is to obtain a lower interest rate. However balance transfers often are more costly than most consumers expect them to be.
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Advertising to Entice
There are plenty of credit card issuers that try to entice new customers by promoting the convenience of transferring a balance from their old card to a new card. The companies will advertise such things as “You can pay off your other credit card!”
Make no mistake- these advertising promotions are more accurately marketing ploys because transferring a balance whether it is large or small is not the same thing as paying it off. It is hard to imagine that some customers are taken in by such ploys but they are! In fact it happens all of the time!
On the other hand, transfers are not always bad news. In some cases doing such will reduce the amount of money you pay out on your credit card on a monthly basis. The important thing to remember is to always do your research.
When Should You Make a Move?
When is a credit card balance transfer a smart move? If you presently have a credit card with a high interest rate then you will want to find one that has a lower interest rate. That makes perfect sense, especially if you are somebody who tends to carry a balance on your credit card and does not always pay it off at the end of the month. Switching could save you a great deal of money on a yearly basis.
There are other important points to consider as well. How much does the new offer charge for late fees and how much does your present card charge? What about penalty interest rates? This is something some cards have while others do not.
It is a balancing act trying to decide which card is the better choice for you. For example if you occasionally pay your bill late and the company you are presently with has a lenient policy regarding such then do you really want to take your business elsewhere? You need to decide what is most important to you.
Be aware that balance transfers may be free in some cases but there are plenty of companies that will charge you for what they deem as a privilege. Some charge as much as three percent of the total balance that you are transferring. Is this a charge you are willing to accept or not? This is yet another consideration you must bear in mind when it comes to transferring a balance from a current credit card to a new one.