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To Transfer or Not to Transfer Your Credit Card Balance

Jason Simon

Posted May. 12, 2008
Tagged: Money, CreditCards, Debt, MoneyTips

Opening a new credit card account may seem like a bad idea if you're trying to pay down credit card debt, and it definitely would be if all you do is charge more debt to the new card. But transfering your balance to a new card with a lower rate may help save you money in the long run.

Often, credit card companies offer low introductory rates (2%, 1%, and even 0%) that last for six months to a year after the balance transfer takes place. A 0% interest rate balance transfer allows you to pay down the balance on the new credit card without incurring interest charges for a given period of time. The money saved in interest can then be applied towards the principal each month, thus reducing your debt even further. But before you go for it, here are a few things to consider:

Some credit card companies charge fees for each balance you transfer to their card. Read the fine print!
Just because you're offered a low rate, it doesn't mean that you are guaranteed that rate, and this is especially true if your credit history isn't that great. Read the fine print!
Your interest rate after the introductory period may be higher than what you're paying right now. Read the fine print!
Many offers now stipulate that if you transfer balances from the new card within a 12 month period, the normal interest rate will be applied to all outstanding balances retroactively. Read the fine print!
Some credit cards require that you pay off the balance transfer amount first, leaving the new and higher interest rate charges buried underneath. Read the fine print!

If you decide to do a balance transfer, it's important to continue making minimum payments on your old card while waiting for the balance transfer to take effect; this can take a few weeks. And most importantly, read the fine print!

My name is Jason Simon and I am your Qvisory Money Content Manager.

Money matters to me as much as it probably matters to you. I know what it’s like to feel anxious, confused, and angry while trying to figure out how much to spend on rent, where to find a job, or which credit card to use. These are the types of decisions we all must face.

I strongly believe that Qvisory is opening a space to discuss these issues, learn from each other, and creatively advocate for money, work, and health issues that affect our daily life.

I have worked for a number of nonprofits in the field of intergenerational relations and dispute resolution. I graduated from George Mason University with an M.S. in Conflict Analysis & Resolution and the University of California, Santa Cruz with a B.A. in Sociology and Community Studies. See Jason Simon's other posts and profile.

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