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Credit card balance transfers—banker's trick or consumer's treat?

Balance transfers are one of the latest offers credit card companies are making in an increasingly competitive credit card market. This is good news for you, if you're shopping for a new or improved credit card. A credit card balance transfer offer allows you to shift your card balance from one card to another—often at a lower interest rate. But, there are some considerations you need to think about.

• You must still apply for the card and you may be refused all or part of the offer. Transfer balance cards usually require good credit. So, you may apply for the platinum offer, and be denied, but sent another card that may or may not have the same deal. The transfer you've approved will still go through, and you may discover yourself paying an even higher APR or annual fee than on your original card.
  
  
• Transfer balances often advertise a zero percent APR (“0% credit card balance transfer!”), but the credit limit may be quite low, or there may be a fee to transfer the balance of one credit card to another (sometimes the fee is high enough that it wipes out any savings advantage associated with the 0% offer).
  
  
• Transfer balances often have limits associated with them. So, you may apply to have $5,000 transferred from one card to another, but only get a $2,500 limit. You'll still get the card, with that credit card balance transfer, but the remainder stays on the original card. Or, the remainder is also transferred to the new card, but under a different, and possibly less advantageous, deal than the original offer.
  
  
• Credit card balance transfers often have fees and penalties associated with them. This is one time it'll pay for you to read the fine print.

Credit card balance transfers do have their advantages. If you're paying a high APR, finance charges, or other user fees, you may save significantly by transferring your balance to a new card. A credit card balance transfer often comes with a 0% interest offer for the first six months. And that can mean a lot of interest savings. Finally, if you're using two or more cards, a credit card balance transfer is one way for you to consolidate your debt, eliminate multiple cards, and save big on interest fees.

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