Balance Transfers for 0% Interest

So you have received a credit card offer that allows you to transfer your current balances from other credit cards to this new credit card at an interest rate of 0%. Sounds good, right? Maybe, but there are some definite pros and cons to the idea.

The most important part of the offer is how long does the 0% interest rate offer last. These offers do not usually last for a long time. Some companies offer it for three months and some will offer it for up to one year. So make sure that the rate offer is actually worth the transfer.

You are probably thinking that no interest for even three months is better than paying interest for those three months. That is only true if you are actually going to save money. See, most balance transfer offers require a transaction fee for each transfer.

Transfer fees differ for each credit card company. Most of them charge about 4% of the actual amount transferred. But they usually have a cap on that amount. That means that if they have a cap of a $75 fee you will pay 4% until reach the $75 limit. Remember that fee is for each transfer.

If, for instance, you only owe $1000 and are currently paying 9% interest and you want to transfer the balance over, you will first pay a $40 fee. If the rate is only for three months, you did not save any money, it actually cost you money to do the transaction.

But if you could borrow, say $8000, you would pay the transfer fee of $75. If the offer is for anything over three months, you will actually save quite a bit of money. So do the math before you jump on the offer.

The biggest pro to this is, if they are offering you a high enough credit limit that you can consolidate a few very high interest rate cards on to the 0% interest rate card. You can, even after paying the fees, save a lot of money. This is especially true if the length of the offer is for nine months or more.

One thing to check with first is what the interest rate will be after the promotional time period expires. This will let you know if you can just keep this card or are you going to need to shop around for a better card two months before the rate expires. Usually, if you are a good payer, the interest rate you will receive will be pretty reasonable.

So there are a few pro and cons that come with a 0% interest rate offer. Just check first and make sure the rate out weighs the fees. If that is, in fact, the case, go ahead and consolidate some of those high interest rate cards and save yourself some money.

David Tanguay is dedicated in helping individuals & businesses get out of debt. To compare hundreds of credit card offers & rates please visit Compare Credit Card Rates at easycreditcompare.com