Use Low Interest balance transfer credit cards to save money

Transferring your balances from a high interest to low interest balance transfer credit cards is a smart financial decision. How ever are all of these low rate balance transfer cards created equal? Are you getting the same deal everywhere? This article explores the benefits of transferring your balances, what to watch out for, and how good of a deal you should hold out for. After reading this article you should feel confident that you can choose a low interest balance transfer credit card on your own.

Why transferring is smart and what to watch out for

The obvious reason to transfer your balances to low interest credit cards is because you're going to save in interest fees each month. There's a secondary benefit as well, you're going to pay off your debt quicker. If you're continue to pay the same payment each month on a low rate card, you will be paying more towards your balance and therefore pay it down quicker. This is great news, especially if you've been struggling to get your credit card debt paid off. There are how ever a few things to watch out for.

Always be sure you're truly getting a better deal then what you have. Some cards offer very low and attractive introductory fees, how ever they are raised quite drastically after the intro period is over. These low rates might last for 6 months to a year, but unless you can pay off your entire balance in that time frame, they might not be the smartest move.

Don't be afraid of annual fees

Some low interest balance transfer credit cards will charge an annual fee to be a holder of that card. Why do they charge it? Well the exact reason I'm not sure, but I can only speculate that it's a way for the bank to make a bit more since they're not making as much in interest. My point though is don't be afraid to pay an annual fee, most low interest rate credit cards will be $50 or less as a fee, and depending on your balance you stand to save 10 times that or more in interest. It's a small price to pay for savings in my opinion.

So how low of a rate should I shop for?

Depending on what your current interest rates are will determine how good of a deal some low rate cards will be. I'll assume that your paying between 17%-20% interest. Therefore switching to anything that is 11.5% or below is a very worth while change, and realistic change. You'll notice there are some offers on the market that are under 10%, these cards are often only introductory rates, or are for those with a very high credit rating. Now, I'm not suggesting you have a poor credit rating, but if you're declined for one of these ultra low interest balance transfer credit cards don't feel bad. On the other hand if you can find something that has a 10% or less rate you're golden, take it and run.

Another tip that you can watch out for is some cards will offer a low introductory, or even fixed rate on balance transfers and charge and higher interest rate on new purchases. If you have your spending habits in check and know you aren't going to be racking the new card up then this is a worth while