Transferring Credit Card balances

You might well be wondering why transferring balances from one credit card to another is at all being discussed. After all, with so many eager hopefuls out there to oblige you, all that you have to do is to grab the first attractive offer, get the balance transferred and be done with it. Unfortunately, things are not always that simple. But before we go into the details, for the benefit of those of you who are wondering what this is all about, let’s do a brief recap.

The competition among credit card companies is so hot that they would do anything to grab one another’s business. Transfer of balance debts on your credit card is one such thing. The new credit card company would offer to transfer all the debts that you have accumulated in your old credit card to a new credit card issued by the offering company. The attraction for you is that for the first few months (usually six months to one year), you pay no interest on the transferred balance. If that sounds too good to be true, don’t worry. Credit card companies do make such offers and honor them too. You may be asking what the catch is. There’s none really, provided you are careful enough.

The first thing to remember about such balance transfers is that any payments that you make are first adjusted towards the transferred balance. Makes sense, doesn’t it? You can hardly find fault with the credit card company for wanting to recover the transferred loan at the earliest. The problem is that if you make purchases in the meanwhile, these purchases will attract normal interest, which as you know can be pretty hefty. So don’t go on a buying spree thinking that for the first six months you don’t have to pay any interest. That applies only to the transferred balance, and since any payments made by you are adjusted against this interest free portion, you are almost certain to end up paying interest on you fresh purchases. What’s worse, you could end up building a new debt because of all those purchases, even as you are in the process of paying off the old one.