What to Look for in a Credit Card Balance Transfer

A great way to reduce your interest payments each month is to look at a credit card balance transfer. However not all transfers are as good as they sound and you should always be cautious when you are going to process a credit card balance transfer.

I recently had a credit card balance transfer that worked out very well which was a relief because the previous one was a complete nightmare. I am going to tell you about both because I think it is very important that when YOU carry out a credit card balance transfer you know what homework to do before you go ahead with that transaction.

The first and the worse was around 2 years ago I had to renew some qualifications and to do so had to get some money quickly. I took out a credit card and put the cost of the training and the qualifications on there (at the time my employer was going to pay for the qualifications but later decided this wasn't the case which will explain more later on). I paid went on the course got my qualification and went back to work. A few months later I found myself with a high rate of interest on the credit card and a balance that was almost increasing every month rather than going down because I was paying the minimum.

I had a credit card offer through the post for a balance transfer lower interest for 6 months, I jumped at the chance obviously. A few days later I received all the paper work and realized very quickly that only half of my previous balance had been transferred! Alarm bells ringing I called the new company and asked them what was going on. I was told that although my credit limit on my new card was double what had been paid off the old balance, I could only use half of that credit limit to carry out a credit card balance transfer! The meant rather than putting everything on a card with a lower rate for six months I was now stuck with two cards and the original one was at the original rate! I eventually paid off these balances although it took a while but this was a major mistake on my behalf not asking if the whole balance could be transferred.

The second time was after I needed to fly to Australia for a funeral and I had to get my hands on the money very quickly. I purchased my ticket on the second card which I kept for the exact purpose that it was used, an emergency. When I got back I had a credit card bill waiting for me and when I opened it and saw what the projected interest on the money was I quickly started looking around for a better deal.

This time so not as to be caught out I found out that I could transfer 75% of my balance. The first thing I did was to call my old credit card company and tell them that I was able to transfer the whole balance to a new company and get a better rate than them for 9 months (a little white lie I was only getting a better rate for 6 months although after that the rate was still 4% cheaper). The lady on the phone told me that she would check. She came back with an offer of interest free for 6 months on my current balance. So I transferred 50% and kept 50% where it was. Now again it was split but and this is the big but when getting making a credit card balance transfer, I was better off because the payments were less and the balance was interest free so what I paid came off the bottom line. After the six months I repeated the whole process and ended up with a single account interest free for 6 months which meant that I was able to pay off everything.

It is important to remember that if you get an interest free credit card balance transfer then you need to make sure you don't use that card for anything else. The credit card companies are very clever and anything else you spend gets paid off first because the interest rate on the money you borrowed is higher so they make more money that way! (clever!)

These are just a few tips on what to look for in a credit card balance transfer.