If you’re looking for ways to save money, transferring a high rate credit card balance to a lower rate card could make a big difference. Many lenders send promotional balance transfer offers, but it pays to be alert.
Tips for evaluating a balance transfer offer
- Make sure the balance transfer rate for the new card is much lower than your current rate.
- Determine the length of the special rate offer and whether or not you can make a significant difference in paying down the balance during that time.
- Beware of balance transfer fees. Some lenders charge a 3-5% up-front fee, which adds to your cost. A 3% fee on $4,000 would be $120.
- Be sure the card also offers a good rate for new purchases and that there are no annual fees.
- Don’t run up additional balances on old cards once you have transferred those balances. You may want to consider closing some of them.