5 Ways to Get the Most Out of a Balance Transfer Credit Card

editor@creditsesame.com'/
Mature couple looking at credit card statement

When transferring the balance from one credit card to another, the goal is always to save money. However, if a balance transfer card isn’t managed carefully, it can end up costing you. With a few precautions, though, your balance transfer will save you quite a bit of cash, without giving you a migraine.

  1. Do Your Homework
    A balance transfer card offer is only a good deal if the new card offers better terms and agreements. Ask a few questions about this new card to determine if it will, in fact, save you money:

    • How long will the introductory rate last?
    • Does the card have a balance transfer fee?
    • What about an annual fee?
  2. Know the Game
    While asking questions upfront will help you to choose a card that has the potential to save you money, credit card companies are still counting on you to lose this game. The numbers show that many consumers end up not taking advantage of the introductory period to pay off the balance, and end up paying interest on the balance from the balance transfer. Some even forget to transfer the balance before the introductory rate expires. Bottom line, if you’re going to take advantage of a balance transfer offer, at least make it worth your while. Use the introductory period to pay off the balance transfer so that you save on the interest (the main purpose of the balance transfer, right?). Know the game and play to win.
  3. Be Choosy
    A card with a zero percent interest rate on balance transfers may look great, but then if you buy an update to your spring wardrobe, you may be paying interest on that new shirt and pair of shoes until you finish paying off the balance transfer. So, make sure the introductory rate applies to both the balance transfers and any additional purchases. Also, take a look and make sure the card you choose is also a card you wouldn’t mind keeping when the introductory rate expires. You’ll be glad you did your research if you forget to track the expiration date.
  4. Keep Track
    Keep track of when the introductory rate expires. If you’re not going to be able to pay off the card before the introductory period ends (which you’ll probably know going into this arrangement), mark a date on the calendar six to eight weeks before and to strategically shop for a card that can help you with your plan. This doesn’t mean to card hop from card to card, but if you plan wisely, you may just be able to save yourself a pretty penny by strategically planning to use two balance transfer cards over a 2 year period. Again, know the game and play to win.
  5. Stay Focused
    These techniques only work if you’re serious about paying off your debt. A low interest rate introductory offer will be a reason to shop for some people, so if you’re one of those, find different ways to pay down your debt. However, if you can be focused about keeping up on your payments and not using the card, then this strategy is a great way to get you back in the black.

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Published May 2, 2012
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