A credit card balance transfer is a common offer out there. This involves applying for and being approved for a new credit card. Then a balance that you have on another credit card can be transferred over to the new one. The process often has a very low introductory interest rate or a 0% interest rate for a period of time.
This allows the consumer to be able to save money over a higher interest credit card payment. As a result, more of the money they pay towards the bill will go for the actual balance and getting that debt paid off. A credit card balance transfer can be a great idea as long as you believe you can fully pay off that debt within the period of time that is offered with the new credit card guidelines.
Those are the best case scenarios for a credit card balance transfer to be used. Too many consumers don’t see the whole picture though until it is too late. They go for that introductory interest rate and pay what they can on their balance. However, that rate may only last for three months or six months depending on the credit card offer.
Then the balance that remains has a new interest rate attached to it. With some credit cards that can be more than 20%. Then the consumer will end up paying much more on the credit card debt than they would have overall if they had allowed that balance to remain on the first initial credit card.
There are some very crafty consumers out there that just go with a new credit card balance transfer offer before that can happen though. They are very good at juggling low interest offers so that they can get their high dollar credit card bills paid off. You do have to be very careful with such a process though
The terms and conditions of a credit card balance transfer offer can be very different depending on the card. With some of them, if a payment is even a day late they will inflate that interest rate. Then a consumer through they had a longer period of time at a low interest rate and it is taken away from them.
There are certainly times when a credit card balance transfer is a good idea. It can help to save money on balances as long as you are able to pay them off quickly. However, they shouldn’t be used as a means to be irresponsible with credit card use.