Hey everyone and welcome to the Monday Money of the week. Just in case this is your first time joining me today, I’m Joshua Rodriguez. I write on several financial topics every Monday hoping that my tips will help consumers save or make money. That being said, today, I want to address balance transfer credit cards. These offers have been popular since the day they were created and, continue to gain in popularity. They are a great option for the right consumer but, some of them have horrible cons that come along with the pros. That being said, here is why I always say balance transfer credit cards can be your best friend or your worst enemy…

How Balance Transfer Credit Cards Help People

These specialty credit cards were designed as a way for consumers who have great history of using credit cards and paying back loans to reduce interest rates and consolidate debts. Just like any other card, they are small, rectangular pieces of plastic with a thin magnetic strip on the back that attaches your card to your account and allows the lender to track purchases. Nothing special there right? The are 2 really special aspects associated with balance transfer credit cards that have everyone talking. Here they are…

  • Low Interest Rates – Although, not all balance transfer credit cards will come with an incredibly low interest rate, because of the nature of these offers, most of them are very, very competitive. Most balance transfer offers come with 0% promotional rates that will last from 6 to 18 months. After the promotional interest rate, the remaining debt will be charged the standard rate for the card, which is usually pretty competitive as well.
  • The Ability To Transfer Debts – Unfortunately, you can’t use just any credit card to completely pay off other debts. This action is called a balance transfer and is unique to balance transfer credit cards. Using these offers, you have the ability to transfer all of your debts to the one, easy to manage account.

Obviously, it’s easy to see why so many people are interested in these offers. The bottom line is, lower interest rates could mean hundreds or even thousands of dollars saved over the term of a debt. Not to mention, consolidating several accounts into one comes with the benefit of only having to remember one due date, one payment amount and one set of terms. With several accounts, trying to remember all the details can get a bit hectic.

In What Cases Can Balance Transfer Credit Cards Be Your Worst Enemy?

Balance transfer credit cards definitely aren’t a perfect lending option that fits all consumers out there. As with any other option you come across, these offers have pros and cons. That being said, there are a couple of things that you should know about before applying for one of these cards…

  • They Are Not A Good Debt Relief Option – Because these offers come with low promotional interest rates and allow you to consolidate debts, consumers often confuse them as credit card debt consolidation programs. This is not the case. Although, the lower interest rate is nice, if you are experiencing a financial hardship, you may want to look into other options like credit card hardship programs, debt consolidation and debt settlement.
  • Some Lenders Can Be Very Sneaky – Before applying for balance transfer credit cards, you should always take the time to compare the offers available to you. In this comparison, it’s important to read the fine print in the terms and conditions of the offers you are comparing. And, I mean, read the entire terms and conditions from top to bottom. Some lenders find ways of putting fee based terms where they don’t think you will look. It’s important that you know what you’re getting into so, before applying for any balance transfer credit card, make sure to go through the terms and conditions with a fine toothed comb.

More To Come Next Monday…

Thanks again for taking the time to read my post. Don’t forget, I love to read your comments! They help me to decide what to write about and some of the questions I’ve been asked have been delightfully challenging so, please keep the comments up! I’ll see you all next Monday!

Author Bio: Hi, I’m Joshua Rodriguez, editor of Monday Money on Modest Money and owner of CNA-Finance. Thank you for taking the time to read this week’s Monday Money! I’d love to read what you’re thinking in a comment below or connect with you on Google+!

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