Many Tennesseans are probably aware that certain credit cards are marketed to consumers as balance transfer cards. These credit cards often offer a low or zero interest rate for a certain period of time, which can make them appealing to those who have significant balances on several cards that are subjected to high interest rates. However, you should consider many factors before taking the plunge and getting one of these cards, as acquiring one of these cards could cause more headaches than they are worth if improperly used.
First, it is important for you to realize that most balance transfer cards subject holders to a balance transfer fee. Typically, the more debt you transfer to the new card, the higher the fee. There currently is no cap. However, a typical fee may be in the range of three percent.
Second, you should recognize that, although these balance transfer cards entice consumers with their low or no interest rate, this is only a teaser rate that will likely expire over time. Therefore, if you transfer all of your credit card debt to the new card and fail to pay it off before the teaser rate expires, your debt could, once again, be subjected to a high interest rate. It could even be higher than what you were paying on your other cards. So be sure to read the fine print regarding the teaser rate, how long it will last, and what the standard interest rate is after the teaser rate expires.
There are many other issues to consider before obtaining a balance transfer credit card. It may be the right option for you, but if you are struggling with overwhelming credit card debt, then it might be best to speak with an attorney who can help you better assess your situation and the steps you can take to free yourself from debt.
Source: AARP, “10 Things You Should Know About Credit Card Balance Transfers,” Lynnette Khalfani-Cox, accessed on Aug. 13, 2014.