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When Do Balance Transfers Make Sense Thinking about taking advantage of the offer you just got in the mail to transfer your credit card balance to a new card? Here are some questions to ask before making a move. Overview Do I really qualify for the lowest rate? What is the lifespan of the rate? What are the minimum requirements to keep the low rate? What is the interest rate for a new purchase? What are the transfer balance fees? Do I really qualify for the lowest rate? If you have credit card debt, you may not be a preferred customer and may not get the best rates. Many companies use your credit card report even on a pre-approved credit card, and may present you with a higher rate based on your credit history and debt level. What is the lifespan of the rate? Introductory rates can last six months, a year, or even the life of the transfer. If you can pay off transferred debt while the rate remains low, it’s likely to be a good deal. If not, think twice, because you may be moving to a worse scenario. What are the minimum requirements to keep the low rate? Even a zero-percent interest rate comes with a price: Some cards may require you to make a purchase every month to keep that rate. You’ll probably also have toyou’re your monthly bills on time every month- one late payment could increase the rate forever. Be wary of the broad default clauses that give the credit card company the option of raising your rate at their discretion. Here’s an example: Being late with a payment on another credit card could raise your rate on the new card! Yikes! What is the interest rate for a new purchase? Don’t expect it to be the same low rate as the transfer. If it is higher, you may find that any payments you make are applied to the lowest rate balance first, which means it will take you longer to pay off the card. What are the transfer balance fees? Typically, cards charge about 3 percent of the transfer, up to $50 or $75. But there are special $0 offers to entice you up front, particularly after holiday spending.

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