Thinking of Consolidating Your Credit Card Debt?

Consumers stuck with credit cards with high interest rates might want to consider transferring the balance from high interest rate cards to credit cards with low interest rates. Although it is a good idea take advantage of balance transfers to consolidate debt, there is some risk involved in this practice. The hidden fees in what are supposedly low-interest rate cards can do you in if you don't know what to watch out for.

Below are some things to be aware of:

Credit Card Balance Transfer Fees

Many low-interest credit cards charge a balance transfer fee. Some charge a flat rate of $35 - $45, but some credit cards charge up to four to five percent of the amount transferred. A five-percent fee on a $2,000 balance transfer costs $100. It's also important to note that if you don't make a payment immediately when transferring the balance to the lower-interest credit card, you will also pay interest on the amount that was transferred.

Additional Fees on Low Interest Credit Cards

Though low-interest credit cards are generally preferable sometimes the low interest credit cards make up for it with other charges that perhaps are free on high-interest card. For instance, the high-interest credit card may not charge a fee for making a credit card payment over the phone and a low-interest credit card may charge a fee. These types of surprises either require an outlay of cash or a change in habits. Consumers should make sure that the terms of the new credit card are favorable to their preferred methods of payment and usage prior to applying for the low-interest credit card.

Credit card fees, whether on high interest or low interest credit cards are not truly hidden. By law they must be disclosed to consumers. However, many consumers don't take the time to read the fine print and wind up paying unexpected fees. It's important to carefully consider the true cost of consolidating your credit card debt through balance transfers to low-interest credit cards before making the decision to do so.