Many people think 0% interest credit card offers are the best option for their financial freedom. Wrong, think again. Balance transfers cost money plain and simple. The number 0% sounds incredible, think about it like this; if credit card companies actually let individual's barrow money for free, how are they supposed to make money? Credit card companies are businesses plain and simple. You are overlooking the cost that it is right in front of your face.

Cost of fees to transfer:

The balance transfer fee has been a simple flat percentage rate say 3% with a minimum $5.00 and a maximum of $50.00. For many years credit card companies have been getting around this situation by taking any current balance before the transfer and any charges made after the transfer and letting the interest and principle roll over month after month while you are paying off your balance transfer. The balance continues to grow until your promotional period is over or until you pay off your transferred amount. It comes down to this one simple fact every cent of your payments you make will go to the 0% balance so that you may incur the maximum amount of fees for other balances that you may have. You must remember to think like a business.

Fees vs Interest

You now have to calculate out whether or not the cost to transfer is greater than or smaller than interest you would accrue before you would pay off your current balance. Basically it comes down to this if you make your current payments without increasing or decreasing, within the grace period, and have the ability to pay it off your debt there will be a point at which the 3% fee can actually cost you more than if you continue to pay your current higher annual percentage rate.

Two things to consider:

You need to consider two things when you are determining if a 0% credit card offers and or fixed rate credit card offers are your best balance transfer option.

1) For one you must consider the cost of each taking into consideration the finance charge you will have to pay in order to make the transfer and the APR you will be charged. Most stop here, but you must consider the cost you will incur after the grace period. If you are unable to pay off the amount on a 0% credit card offers within the timeframe stated your interest rate will jump to a premium rate so the credit card company can make back the lost interest by leaps and bounds. On a fixed rate you can calculate the cost for the life of the balance and know exactly how much is will cost to pay off. On a 0% interest card most look at the interest but forget to look at the cost to transfer and the cost they will incur after the promotional period is over.

2) Beware of additional charges: What is your ability to make payments without using your credit card? Most individuals take a 0% credit card and or fixed rate credit card and transfer a balance to it and then begin to charge onto that new credit card. It is too easy to have a credit card on your person and make new charges to it. When an individual makes new charges they are doing exactly what the credit card companies are expecting. A 0% or fixed rate credit card applies all of the payments to your 0% or fixed balance and lets your new charges draw interest each and every month. Basically the credit card companies will roll over as much balance as they possible can in order for you to incur the maximum amount of interest.

Extrememly Important Note:Make sure to Calculate your payoff correctly. Always double check your math as you never want to make decisions based on bad calculations.

Conclusion: Make sure you pay close attention to all of the finance charges that you will incur from beginning to end of your debt. Calculate to the end of debt, and make sure you budget to completely payoff of the balance transfer. Budget your debt the same as you would a house payment or electric bill. Make sure you know everything that will happen before it does.