The Balance Transfer Game

Sometimes your credit card APR is simply too high to continue using that card. If you have already called the credit card company and asked for a lower rate, then the next step is to consider transfering your balance to a different credit card. When transfering a credit card balance, there are a couple key things that you need to be aware of so that you don't end up spending more money than you actually save. Before shuffling your debt around, consider these tips to save you money and stress throughout the process.

1. Pay Attention to the Transfer Fee: Balance transfer fees are often around 3% of the amount tranferred and will sometimes have a maximum fee of around $100. So, for example, if you tranfer $1,000 from one card to another, you will pay $30 in tranfer fees. However, if you are transferring $5,000, then your fee would be $100 since you reached the maximum limit.
2. Check Out Your New Interest Rate: It only makes sense to transfer a balance to a new card if the interest rate is significantly lower than your current interest rate. Since you are paying a fee to transfer the money, you want to make up that money in savings as soon as possible.
3. Find the Expiration Date: It is very rare that a low balance transfer interest rate will remain in effect forever. Often, the interest rate will only last for six months to a year and then your normal, much higher, rate will take effect. If you plan to pay off your card within that time frame, then you will save money. However, if you keep the balance and the higher interest rate starts affecting you, you could end up paying even more in interest than before.
4. Be Prepared: When you call to transfer a balance, you will need to have both credit cards in front of you, as well as the most recent statement from both. They will often ask for the account numbers and mailing address of the balance transfer card. Additionally, you will need to let them know how much money you want to transfer to the other card. It is usually best not to max out the card with your balance transfer, so choose an amount less than the total available credit on your card.
5. Make Your Payments: Balance transfers sometimes take a couple days to process, so continue making your normal payments on both cards to avoid a late fee. Also, once the balance is transferred, be sure to pay all your bills on-time, otherwise they could increase your interest rate without notice.