If your mailbox has been filling up lately with offers from
credit-card companies to transfer your balances at low rates, you
might be tempted to take advantage of the opportunity. After all,
you could save $750 in interest payments in one year if you
transferred a $5,000 balance on a card with a 15% interest rate to
a card with a 0% rate.
However, that offer you got in the mail might not be as good of
a deal as it seems. Bill Hardekopf of
says there are several things to consider before transferring a
Balance transfers aren't free.
You usually have to pay a fee of 3% to 4% of the transfer amount.
So do the math to see if the interest savings exceed the upfront
amount you'll have to pay to transfer your balance.
You may not receive the advertised rate
if your credit score is low. Or you may not be able to transfer
your entire balance.
Pay attention to the rate you'll pay after the introductory
, especially if you don't think you'll be able to pay off your
balance during the introductory period. Look for an offer with a
low, long-term rate. Also, this rate -- not the introductory rate
-- will most likely apply to any new purchases you make on the
You must pay your bill on time
. Your introductory period and rate will likely end if you're late
making a monthly payment.
Transferring a balance doesn't automatically close your old
You must contact your card issuer directly -- but be aware that
closing credit-card accounts can hurt your credit score (see
4 Moves That Can Lower Your Credit Score
). Also, it takes about four weeks for a balance to be transferred,
so continue making payments on your old card until the transfer is
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