That's because once the low-rate period ends, interest on any unpaid charges starts adding up again.
Here are some tips on gauging whether a credit card balance transfer offer makes financial sense:Card issuers typically will charge a fee of about 3 percent on the amount transferred, but it can go even as high as 5 percent. Let's say the fee is 3 percent. On a balance transfer of $10,000, you'll be charged $300 up front.Generally, card balance transfer offers include an introductory period to pay off the balance at zero or a sharply reduced interest.
If you don't pay off the card before the promotional rate period elapses, you will be charged a higher interest rate on your balance and any transfer fees.
In addition, the rules on balance transfers usually require cardholders to make all payments on time. Miss even one, and you may forfeit the low interest rate.Card issuers may approve you, but the amount you will be approved to transfer can vary. And you typically won't know how much credit the lender will extend to you until after you've been approved. That means you may only be able to unload a portion of your card debt onto a new one with a more favorable interest rate.You've taken into consideration that there may be fees and a limited amount of time to pay down your debt before the interest rate jumps. But is opting for a balance transfer card ultimately worth it?
Look at the card jammed with charges that you're considering refinancing through a balance transfer. Estimate how long it will take you to pay the balance and how much in interest charges, given the card's annual percentage rate, or APR, you will rack up over the same period.
Then do the same calculation, based on the terms of a card balance transfer offer, specifically: The promotional interest rate and number of months that it's in effect. Assuming the entire balance can be transferred, that should tell you how much you stand to save.
You can calculate this on an online calculator like this one from Bankrate: http://apne.ws/1gSm3z5Borrowers who are overwhelmed by debt may not qualify for a balance transfer card, as such offers are typically extended to borrowers who have a FICO score above 700.
And adding another credit card to one's wallet may not be the best option.
Consider asking the credit card company to lower your interest rate.
Another option: Seek credit counseling, which can provide assistance managing debt, making a budget and dealing with card issuers. Here's how to find a qualified credit counselor: http://apne.ws/1jSz7HC