Credit Card Balance Transfers - Negotiating the Minefields

Pretty much anyone who has ever been in debt is familiar with debt juggling, where the debt from one credit card gets transferred to another, with lower or no interest. This practice postpones the need to pay and, under ideal conditions, allows to save a few bucks here and there as well. College students are especially adept at this. The only thing that is easier to get on a college campus than a new credit card is a flyer to a frat party. Sometimes students get a new credit card not to have an extra piece of plastic in their wallet or purse, but for the goodies supplied as a signup bonus - caps, T-shirts, coffee cups, pens, towels, and the like. But it doesn't hurt that one's purchasing power increases in the process as well, even if only by $500 or so.

Balance transfer is still widely promoted by practically every credit card-issuing company, but debt juggling is no longer a free ride that it used to be. All major financing institutions now charge you 15% of the balance you are transferring - up to $99 - to use their balance transfer option. This means that doing so becomes feasible only if you are transferring a large amount. There is really no sense in transferring $300 from one card to another if, as a result, you are ending up with a balance of $345. On the other hand, if you're transferring $3,000 that is currently under 18.9% interest to a card where it will accrue only 5.9% interest, your savings will compensate for the $99 balance transfer fee in less than three month. And if you're transferring to a special-promotion card, where you will pay no interest for a certain period of time, this fee will be recouped in less than two months - or even right away if the amount of your transfer is higher.

This is only one in a series of advices I would like to offer to you on the subject of benefiting the most from balance transfers and not being taken for a ride. All the points you will read below are from personal experience. I am not a financing professional of any type, nor do I belong to any organized consumer advocacy group. This is strictly sharing my hard-earned experience for the benefit of the larger community.