0% APR Balance Transfer Credit Card Offers Are Back!

By Pinyo, on March 29, 2009

It has been a while since I get a 0% APR balance transfer credit card offers in the mail — actually, any kind of credit card offers period. Perhaps this is a sign that the financial sector is recovering, or at least, the credit market is freeing up a bit. Of course, this is too naive, and I’ll feel much better when the unemployment number starts to improve.

Photo by Classyshot via Flickr

In any case, while we are on this subject, let’s talk about the good, the bad, and the ugly of credit card and balance transfer.

The Pluses of Balance Transfer Credit Cards

There are a lot of people out there that swear credit cards are evil, but I believe credit cards are financial tools. They are useful and have many financial benefits, but like power tools, they could hurt you if you’re not careful. So how can you constructively use this type of offers to help you?

• Allows you to consolidate several debts into a single more manageable debt.
• Let you save money on finance charges by paying down high interest loans.
• Enable you to speed up your debt reduction — i.e., supercharge your Debt Snowball.

The Minuses of Balance Transfer Credit Cards

Now for some bad and ugly things as it pertains to balance transfer credit cards

• May give you false sense of financial improvement and safety. This could really hurt you if you start adding more to cards that you just “paid off”.
• Balance transfer fee and retroactive finance charges could cost you more than what you thought you’d save. Read the fine print carefully!
• You transferred more that you could realistically pay, and ended up having to pay a higher interest rate once the introductory period is over.
• The deal is off if you are late on your payment, or use your new card.

If you decide to take advantage of balance transfer credit cards make sure you understand all the potential pitfalls and reveiw several cards to find the best credit card offering. I’ve taken advantage of zero interest balance transfer offers in the past, but haven’t need them ever since I started to pay off my credit cards in full every month.

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Pinyo is the brain behind Moolanomy personal finance blog and a few other web sites. If you like this article, please subscribe for free daily email updates.

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