Winning the Balance Transfer Game
Winning the Balance Transfer Game

If you do it right, transferring a high rate credit card
balance to a card with a lower interest rate can help you
save money in finance charges and pay down your debt much faster.

Some people treat balance transfers like a shell game. They
keep their money flowing from one low or sometimes zero)
interest rate card to another to avoid paying hefty finance
charges. This strategy can work well if you are careful. But
there are some pitfalls you will have to learn to avoid.

Verify that there are no fees for transferring your balance.
Balance transfer fees are usually waived when you are first
opening a new account.

Once you are a customer they will charge
you a percentage of the balance transfer as a fee. This will
cut into the amount you are saving by transferring the balance.
So hurry up and transfer all of your higher balances when you
first open the account. Don't wait until later.

Don't use the card for purchases or cash advances. When you send
in a payment, the credit card issuer will apply your payment to
the category with the highest interest rate.

Since your purchases will not be at zero percent, your payments will just go toward
paying off the purchases and the zero percent balance will remain.

While it's true that you won't be paying interest on that amount
through the introductory period, you also won't be paying down your
debt, which was the whole point of transferring the balance to begin
with. Also, once the introductory period ends, that high balance will
start accruing interest again, making it even harder to make your
credit card payments.

Be careful if you plan to continuously switch from one low-rate card
to the next. Some people consider this a smart way to 'work the system.'
But it may cost you in the end.

Part of your credit score is based on the number of times you have requested credit and
the number of accounts you have had open.

When you later go to apply for a mortgage or auto loan you may find that all of those
credit card flips have hurt your score and you no longer qualify for the best interest rates. If
that happens, you'll be paying more in interest charges every month.

By Ed Lathrop

Ed Lathrop is a successful real estate investor and a series 3 commodities futures broker.
He has extensive knowledge of the credit/mortgage markets.  He has built the financial
calculator Website, ezcalculator which is free to use and includes the calculator, "Pay Your
Credit Card Debt Quick."  Ezcalculator can be found at Mortgage Calculator or by going to