Do You Need a Balance Transfer Card?

Many people choose to switch their more expensive balances from credit cards with higher interest to those with a 0% balance, so they're better able to save money on the interest. Even though this can often be a big help to avoid outrageous interest fees, there are a number of points to consider when shopping for a card with 0% balance transfer.

First, do some research into the details of the no-interest period. The no-interest period that many cards offer will often vary as far as terms of length go...some of them quite significantly. For you to receive the best deal and take advantage of the card's flexibility, try comparing the varying terms offered by each card, and look for one that gives the most generous no-interest period on your transferred balance.

Next, look for the transfer fee amount. Many 0% transfer cards will tack on what's called a transfer fee, which they charge for the right to transfer your balance from other cards. This fee is normally anywhere up to three percent of the total amount you're transferring, and can become quite expensive in no time. In several cases, if you're transferring a considerable amount, you might discover that a consolidation loan will be better in your situation. Research the transfer levels, and figure out how much you'll have to pay.

Also, you shouldn't make purchases on your balance transfer card. It should be earmarked for balance transfers only. Don't give into the urge to add debt to the card, since you'll be paying off the balance transfer first. Everything else on the card will sit and rack up interest while your payments are used for the no-interest transfer.

Next, examine the different interest rates. The point is to repay your balance transfer within the time alloted so you won't be charged interest, but you should still keep an eye out for what the interest rate is for future reference. This is in the unfortunate case that you realize you can't pay the transfer off in time, and have to abide by the interest rate.

Lastly, always read the small print. As cliché as that sounds, it's always a good idea to check the fine print with any credit card, so you'll have a clearer idea of what kind of fees are being applied, and how often. Any previously unmentioned limitations will be displayed here as well, so check carefully.