Living Frugal
Should you do a balance transfer to another credit card?

Should you take advantage of a balance transfer offer? Are there things to watch out for? Will you really save money or is it just extra hassle with little or no savings?

Critical Tip:

• If you do choose to go this route and move the balance to another card - cut up the original card.
• It's too tempting to use the card you now owe nothing on. You have a lower monthly payment and can afford another small payment, right? 
• Wrong - always, always, always cut up the original card or you'll be tempted to get right back into the same spot with yet another card.

Now, there's a pretty good chance you will save money in the long run by transferring a balance but to really figure out how much you will save, you have to take several things into consideration:

• What is the interest rate after the offer expires?
• What is the amount you want to transfer another card with a lower introductory rate?
• What is the introductory rate and term of the card I'm transferring my balance to?
• What is the normal APR for this card for balance transfers?
• Is there an annual fee and better yet, are there any additional fees hidden in the fine print regarding balance transfers that you haven't noticed? In the fine print, you may notice a 3% fee to transfer the balance. 

Also, have you called your current credit card company to ask them to consider reducing your rate? Let them know you are going to take advantage of an offer from another card and plan to transfer your balance elsewhere for a lower interest rate............would they like to keep your business by matching the rate?

If you've kept your payments current they will most likely take you up on the offer and match the introductory rate. There's always room for negotiation and this really does work, all you have to do is ask.

If they say no, you're transferring your balance anyway and have lost nothing.

Other important points to consider before transferring your balance:

• Just because you are offered a great rate to transfer a credit card balance, doesn't mean you'll get the rate. 
• Before using the card you just received in the mail, make absolutely sure the 0% still stands.
• Ensure the 0% is on both balances and purchases. 99% of the time, the transfer deal only pertains to the transfer but not purchases.
• The catch that the credit card company doesn't tell you is that they'll expect you to pay off the balance transfer amount first (they apply the money to that amount). This means that every month you have the purchases sitting there accruing interest.
• Keep tabs on when the 0% offer ends and start working to transfer your balance to another offer if you haven't paid off the original balance transferred. 
• The credit card company won't send you a friendly reminder that you're going to be paying a higher interest rate.

In summary, read all the fine print before transferring your balances. You You could easily wind up paying more interest or transfer fees if you aren't diligent in reading the fine print.

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