Consider the Cons of Balance Transfer Offers

In order to win your business, credit card companies sometimes offer low interest and 0% interest for a limited time on balance transfers.  This allows credit card holders to transfer a debt from one credit card on which they’re presumably paying a higher interest rate onto a card temporarily offering a lower rate.  

The average credit card interest rate is about 15%.  If you have a good credit history (which is usually the case if you are receiving these offers today), going from a high interest rate to a lower or zero interest rate may help to alleviate some compounding interest, at least for a while.  This could possibly allow you to pay off balances faster if you work hard on it, but beware of the alternative outcome.  Credit card experts advise that individuals should be careful when it comes to deciding if a card to card balance transfer is the right thing to do.  It’s important to look at your individual situation rather than blindly being swayed by low initial rates and prestigious rewards even though they can be tempting.  Balance transfer offers may have more disadvantages than advantages. 

If you have financial trouble, trouble controlling spending, or lack of discipline when it comes to keeping up with payments, these 0% transfer offers could become a nightmare.  One of the biggest cons is adding to your pile of debt.  If you can’t keep up with payments or pay off a debt before the offer expires, the initial low rate can jump to a very high penalty rate. 

Some experts report that moving balances from credit card to credit card could even harm your credit score.  If this has been the case, you’ll need the help of a credit repair expert to get back on track.  Another issue is that especially today, most of these offers come with 3-5% fees.  This means an additional 3-5% on the balance you’re transferring will be charged to you For example, if you transfer 20,000, you could be charged up to an additional $1000 for the privilege to transfer.  To protect your credit, be sure to do the math and consider your ability to pay off your debt quickly before accepting one of these offers.