Many folks trying to reduce their credit card debt turn to credit card balance transfer offers to achieve their goal.
But while such transfers can be effective when used judiciously, they do have potential pitfalls.
Before you accept any new credit card deal, consider these 10 issues.
You could save money
The major benefit of a balance transfer offer is that it offers you the opportunity to save big bucks.
Balance transfers featuring zero percent offers are especially nice, but even a low-rate balance transfer can save you money if your current credit card interest rates are moderate or high.
Consider this: If you have $10,000 in credit card debt and are paying 15 percent interest annually, a 12-month, zero percent credit card balance transfer could save you $1,500 over the course of a year.
You could get out of debt faster
If you’re chipping away at credit card debt, you’re likely paying for the privilege of having that plastic in your wallet, as well as the convenience of carrying a balance over time.
That convenience comes at a price. The interest you’re getting charged is the bank’s way of making a profit off you, month after month, year after year.
Transferring one or more current credit card balances to a zero percent interest rate card can help you more quickly pay off your creditors.
That’s because your entire monthly payment will be going toward the principal, not the interest, helping you become debt-free faster.
If consolidating your credit card debt onto a zero percent interest card frees up some cash flow in your budget each month, you may be able to make “extra” payments on your debt and get rid of your credit card bills at a more rapid pace.
You can get additional credit card perks
One advantage of doing a credit card balance transfer is that you can apply for a credit card that rewards your spending or gives you perks for shopping that you were going to do anyway.
For example, travel cards, rewards cards and airline cards all frequently offer hotel discounts, cash-back awards or free flights.
If you have a plain-vanilla credit card with no perks attached, finding a balance transfer deal that also offers perks is worth considering.
Free websites such as CardRatings.com allow you to search for cards in multiple categories, including cards that offer cash back; low introductory rates; balance transfers; gas rewards; credit card deals; miles and points.
Continue reading the complete article, 10 Things You Should Know About Credit Card Balance Transfers on AARP.org