credit cards

Credit card balance transfer: a good idea?

The other factor is the credit limit. There's always a chance the new issuer won't dole out a large enough credit line for you to transfer your entire balance, says Linda Sherry, director of national priorities at watchdog group Consumer Action.

Check the fine print to see if there is a cap on the balance transfer amount. Otherwise, you may not find out if your new account will be able to swallow your balance until after the account is opened, Sherry says. Then you'll have two credit cards you need to pay off.

"Banks are not giving out high credit limits these days, so if you have a sizeable balance, the chance you'll be able to move it over in its entirety is pretty slim," she says, "unless you're an absolute stellar credit score."

Still, moving only a portion of high-interest debt to a low- or no-interest account could make it easier to pay off the debt without incurring a lot of interest, Nicol points out.

Living with a transfer

You qualified for the balance transfer and moved your debt to a no-interest account. Now what?

Make sure the old card has been paid off by getting a statement from your old issuer. Sherry recommends keeping the old card open, charging very little each month (such as gas) and paying off the balance in full. That will help boost your credit score while you pay down your debt. If a balance still remains on the old card, continue to make payments on time.

Meanwhile, attack the balance transfer debt before the introductory period is up. And make sure every payment gets in on time. If you fall behind by 60 days, your low-or no-interest rate could disappear, says Nicol.

Last, realize that purchases on the new credit card may fall under a different APR than your balance transfer debt. If the rate is higher, avoid making purchases on the card because your payments will apply to the balance with the highest rate first. The point is to get out of debt, not dig a deeper hole.

"If you're getting into a balance transfer just to put off the inevitable and put on more debt, there will come the time to pay the piper," says Ulzheimer.

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Product Rate Change Last week
Balance Transfer Cards 15.71%  0.01 15.70%
Cash Back Cards 16.36% --0.00 16.36%
Low Interest Cards 10.91% --0.00 10.91%
 
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