Credit Card Balance Transfers: Play to Win

Credit card balance transfers can seem awfully enticing when you're sitting on a load of debt and a high interest rate. Here's what you need to know to win at the transfer game:

The Offense
First and foremost, it's important to understand that credit card companies aren't in business to help you out of debt, but rather to keep you in it for as long as possible. It's what makes them profitable, after all.

So how are they going to make money off of you when they're offering no interest for six months or a year? Any way they can.

First, you're likely to be charged a transfer fee for the "privilege" of moving your balance to their card. This might be a flat fee of $50 or it could be a percentage of the debt that you intend to transfer. Either way, it's going to cost you.

They're also banking on the fact that you won't pay off the balance before the introductory period ends. They know that people like to shop, and that unexpected expenses tend to pop up. Take a peek at what the interest rate will be after the introductory period, and it will generally be much higher, if not outrageously so.

Finally, if you take a close look at the fine print, you'll also see that the introductory rate will be removed from your card if you fail to make your payments on time. Be just a day late on one payment, and you could find yourself facing a steep rate increase.

The Defense
So how do you play to win among all of these tricks and traps? By playing by the rules, and getting out of the game as soon as you can.

Before you making any balance transfers on credit cards, take a look at how much you owe and assess how long it's going to take you to pay off the balance at the new interest rate. Can you pay it off before the introductory period ends? If not, a transfer may not be in your best interests.

If you decide to go forward with a balance transfer, your best defense is to get those payments in on time each and every month. You don't want to do anything to cause your introductory rate to be revoked early.

Not good at keeping up with bills? Consider setting up an automatic withdrawal at your bank to take the responsibility out of your hands.

Finally, mark the date the introductory rate ends on your calendar, and remind yourself of this date often. This will help you to stick with steady payments and also help you assess whether you're on track with this payoff date.

Don't think you'll have the balance paid off in time? If that's the case, take a look at what the interest rate will go to after the introductory rate expires and decide whether it would be better to leave the balance on that card or to shop around for another offer.

Remember, switching cards frequently will hurt your credit score. If the balance is relatively small or can be paid off in a short time, it may be better to stay with your current credit card company.

Leave Victorious
Credit card companies work hard to keep you in debt. Very hard. Learn the ins and outs of balance transfers, and then play to win.