You hopefully won't be needing to make a balance transfer any time soon, but you need to understand balance transfers, so here's the scoop.
The Definition: paying off one credit card in total by charging the debt to another credit card.
The Theory: if you're paying rip-off rates at one credit card company, why not pay off that debt by moving it to a much cheaper credit card?
The Joke: you'll see "balance transfer" ads everywhere, and thousands of people use them, dreaming of huge savings. And why shouldn't they be excited?
- The ads promise "zero" percent transfer rates.
But here's the truth: many of these "balance transfer" ads don't offer you help, they offer you trouble!
- The ad might say, "0 percent interest on your balance transfers!"
- But when you read the fine print, you learn the 0 percent is only for up to six months or less.
- If you don't pay off the entire amount you transferred within six months, the interest you pay on the balance can skyrocket with some companies.