Process: Transferring Credit Card Balances:

With the average American owing something like $8500 on their credit cards, it's no wonder that the 0% APR balance transfer offers look so enticing. I get them all the time in the mail and now I have started receiving email offers from Chase.com to transfer balances from high APR cards to theirs. When I was younger I would strategically look for low rate credit cards so that I could transfer my bigger balances and always pay the lowest interest rates possible on my debt. I must admit that this process saved me $100's in finance charges but rumor has it that the more you do balance transfers the odds are that your credit score will get dinged by the credit agencies. Ideally you transfer over a few $1000 to a lower APR card and then pay it off with the reduced rates. The best balance transfer offers are those that give you up to 12 months with no fees and no interest as part of the deal. Zero % APR's are definitely worth it and you then have the chance to get out of debt.

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Credit counselors would be the first to advise you on consolidating debt in order to get reduced payments and be able to manage your bills better. Ultimately, you should transfer your balances to 1 credit card (the one offering the lowest rates) and then cut up your remaining credit cards to make sure you stay out of debt going forward. The problem with these "balance transfer cards" is that the fine print often gets consumers in the long run. Many times built into the balance transfer are transfer fees or annual fees for using the card. The credit card issuers have their tricks in order to get money out of your one way or another. The better your FICO score, the more likely the offers you get via mail will truly be helpful. Credit is not something to be taken lightly and it well worth the effort to protect your credit scores over your lifetime. If you did the basic math on a home loan over 30 years ($300,000) at 5% APR versus 6% you would find that your monthly payment would be almost $200 more each month and the interest over the lifetime of the loan would be $347,000 compared to $279,000. That's a lot of money that you should be keeping in your pocket. So, if you are going to take advantage of a credit card balance transfer, make sure you read the details and get the best deal you can. Just don't make it a habit or else it could negatively effect your credit score and potentially hurt your creditworthiness.

Best Balance Transfer:

The best balance transfers are those with long introductory rates (hopefully 0% APR for 12 months) - get at least 6 months at low rates or don't do it. There should be no annual fees associated with the new card and you should be able to avoid transfer fees. If you look at the small print you'll find the details on the fee to transfer the balance over. It could be zero, but odds are the card issuer will want 2 or 3% up front. Another important factor to consider is "what will the APR be on your balance after the introductory rate". Worst case scenario and you don't get the balance paid off in time, you don't want the rate to jump from 0% to 25% overnight. The card issuers are hoping for that to happen and you want to avoid that. Look for no fees, low rates that last for the longest period of time, and whenever possible zero % APR on purchases as well. Credit cards get most people into trouble because they act like it's free money since they aren't forced to open their wallet and take out their hard earned cash. If you do get into credit card debt and need to transfer balances to save on payments, get some financial advise so that moving forward you don't repeat the cycle over and over again. I have found that my VISA card companies like Chase and FirstUSA provide the best deals on balance transfers so look for the offers in the mail or go to their websites.

0% Balance Transfer:

I have a few VISA cards with airline miles built in (Southwest Airlines and United Airlines). I do pay a yearly fee to have these cards, but the limits are high and the APR's are reasonable. I get 0% balance transfer offers via the mail at least once a month and the good news is that I don't have any outstanding balances or debt at this point. Perhaps they have me on a list from my past behavior. The current global credit crunch has shown consumers how fast credit can dry up and you want to limit your debt during these times. Get dedicated and make it a point to eliminate all your credit card debt. It's ok to charge things every month, but make sure you have the cash to pay the bill at the end of the billing cycle. Whenever you are carrying a balance each month that you can't pay off, be sure to keep your eyes open for offers with zero percent APR's on transfers. Take advantag of what the banks are offering and get rid of your balances ASAP. Sure, some people will continually stay in credit card debt but that doesn't have to be your destiny.

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