Credit Card Transfer Deals are a Careful Way to Save Money

A credit card transfer deal is the transfer of a balance from one credit card to another. Many credit card companies offer transfer deals at good rates in order to attract new customers, but it is also to get a transfer using your existing credit cards. Although you have to be careful, credit card transfers are good ways to save money.

When making a transfer deal, there are often two important interest rates. First, there is the introductory rate, which is usually very low or zero. Companies offer the lowest rates possible to attract new customers. After the introductory rate concludes, the rate jumps to a higher rate that will continue for the rest of the deal.

Some people take advantage of this process by swapping their balance around between different companies right as their introductory rate ends. Credit card companies have caught on, though, and may have language in the agreement that bans you from moving your balance a second time. Similarly, it can be dangerous because each new credit card application lowers your credit score, so you have to be sure to just move an existing balance rather than open a new one. In addition, transfers also usually have a fee depending on the amount of money moved.

However, this strategy points to a good way to use transfer deals. Transfer deals can be worthwhile if you can pay off the balance during the introductory period at the low rate, or at least not use the card as much during the normal rate period. The point of this is to take advantage of the low introductory rate and then ignore the higher normal rate.

Credit card transfer deals can be useful, but you must look around to see the best offer you can get. Opening new credit lines can hurt your credit, so you have to be sure not to open new cards. Similarly, you may be better off just paying off your current balance and improving your credit score so that in the future, you will get better rate offers altogether. The better your credit, the more money you will save over the long run, but in the short run, transfers can help you save some money.

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Graham Billings

Graham Billings is a senior at the University of North Carolina at Chapel Hill with a double major in Economics and Political Science. He plans to graduate in December of 2009 and then attend law school in the fall of 2010. He is a member of the Economics Club at Carolina, which brings in speakers and hosts events in order to discuss current economic issues and help those who do not have a background in economics become more familiar with it. He is a National Merit Scholar and Dean’s List recipient. He is originally from Greensboro, North Carolina and attended the Early College at Guilford for high school, taking classes at Guilford College. In addition to economics, his academic interests include the legal and political system. He headed the only student-run, high school-level Honor Court in high school and participated in a national model Congress in San Francisco, run by Harvard students, and won awards of excellence for his work on the mock Supreme Court. Additionally, he tutors Carolina students in economics on a volunteer basis.

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