Owing money to credit cards can turn your life upside down. Interest accrued on money owed becomes so high that you begin to struggle to make payments and balance your book. Many consultants and friends will strongly recommend trying out balance transfer as a way out of the financial tangle. While the option may bail you out temporarily in the long run you may just be increasing your debt.



Here are simple rules to follow when considering transfer of balance owed on credit cards:

1.Determine how long the 0% or low interest rates are valid. Often credit card companies make low or no interest offers to lure clients but the offer has a time limitation after which the interest rate will rise again. Try and find a credit card company that is making a low interest offer for a longer period of time. And only transfer that amount of balance that you are certain of paying back within the period.

2.Read the offer carefully. Most credit card companies charge a transaction fee for credit card balance transfers. Many card companies print important terms and conditions in small fonts. Read the document carefully.

3.When you make a balance transfer ensure that the new company sends a notification to you and the old card company. Verify that the old card company receives all the required paper work and that it acknowledges transfer of balance. Most important is that you must retain both the old and new card for at least a year if you do not wish to damage your credit history.

4.Weigh carefully the pros and cons of 0% for a limited period against a low interest offer over a longer period of time. Sometimes it is advantageous to transfer balance to a low interest credit card instead of a limited offer of 0%. When you calculate things like transaction fees, rising interest and so on you may find there are more advantages to transferring credit card balance to long term low interest card over a short term 0% interest card.

5.Many credit cards that invite transfer of credit card balances charge high rates for use of the card. So, when you use the card to make purchases and so on you will land up paying higher interest rates over what you were paying with your old credit card. It is important for you to understand clearly the functioning of credit cards that invite transfer of credit card balances.

While contemplating a credit card balance transfer think about:

?How much you will save on the whole not just the lowered interest rate.

?Determine how much unpaid balance should be transferred. You need to check whether the 0% or low interest card has in place limits.

?Budget how you are gong to pay your debts. Prioritizing and finance planning is crucial.

?Find out what the fees payable for transfer of funds some credit card companies will charge at least 3% of the amount transferred.

?Find out if an annual card fee will be charged.

?Placing limitations on use of credit cards. Put away the cards and do not give into temptation until you are free of debt.

Debt can be dangerous and the first step to take is to get out of debt by careful knowledgeable planning.