Balance transfer cards enable you to get credit card debt under control by transferring the owed balance on one card to another card which has a lower interest rate for a specified period. You normally pay a percentage fee on the amount transferred, and then have a much better interest-rate setup on the new card (some credit card interest rates can get as high as 30%, while the balance transfer card rate could be very low or 0% for a time-period).
So there are two factors that mainly determine how good a balance transfer deal is – the amount charged on the transfer and the low-interest setup. Some cards might charge a higher percentage on the transfer, and some cards will have a longer low-interest period with lower interest rates during this period. Your credit score determines your availability for these cards. It might be necessary to increase your credit score to get the best deals.
If you can avail of a low fee balance transfer deal, it can be a very cost-effective way to manage credit card debt. You can transfer more than one debt to the new card provided you remain under the set limit, and this could clear up several debts at once.
With a low fee card, this can be done for a very agreeable cost, although you’re paying more up-front you will pay much less in the long-run. Its important to know that there are increases in interest after the set low-interest period, however, and if you don’t pay off the full amount in the specified period (usually around 12 months) you will start paying interest again on the amount owed.