If you are tired of paying high credit card fees you may be able to lower your interest payments by simply transferring your balance to another credit card. A balance transfer can be a smart and simple way to lower your credit card costs. In order to maximize your savings you need to be certain that you understand the terms and conditions of the balance transfer credit card offer.

Before deciding on a balance transfer credit card, you may want to consider keeping your current credit card. Before you make a move, try asking your current card for a lower interest rate. Tell your credit card company that you are considering transferring your balance to a credit card with a much lower rate and find out if they are willing to make you a deal. You might be surprised.  Of course, they may not be willing or able to accommodate you.

Advantages of a Balance Transfer Credit Card

Transferring your balance to a balance transfer credit card with a lower APR or lower fees can drastically reduce your debt and your monthly payments. Credit card companies have a variety of balance transfer offers. The most advantageous is 0 balance transfer credit cardsoffering 0 percent for six to 12 months. Some cards link the introductory annual percentage rate (APR) to billing cycles, charging 0 percent APR for the first four to six cycles.

Choosing to transfer your balance can also give you access to more benefits. You may be able to get a new card with no annual fee, a longer payment grace period, or even cash back or other rewards. Car rental insurance, identity theft protection programs, and money saving discounts may be available with a new credit card.

The Balance Transfer Process

Most credit card companies use low interest rate balance transfers as a way to draw new customers. There are typically three ways to transfer your credit card balance. One way is to simply fill out the paperwork sent by your new credit card. Another way is to contact the balance transfer credit card that you want to use and ask them to arrange the balance transfer from your other card.

A different option is to shift your balance by writing balance transfer or convenience checks issued by your new credit card. These checks look like any other check and work the same way. You write the check for the amount of the balance transfer and send it to the credit card company that you want to transfer your balance from. These checks may come with an expiration deadline, so be certain that you use them in time. If you wait too long, you may be charged the regular interest rate for your new card.

No matter which transfer method you take advantage of, remember that you can only transfer a balance up to your credit limit on the new credit card.

Watch Out for Credit Card Fees

Balance transfers may be treated like cash advances and therefore have transaction fees. There is usually no fee for taking advantage of special balance transfer credit card offers. But the transaction fee for balance transfers can be up to 3 percent of the amount of each balance transfer, with a minimum of $5 and maximum of $50. This means that a small balance may not be worth transferring because of the transaction fee.  Figure out your overall savings before deciding to transfer any balance.

Check credit card applications for special fees that you may find. One of the most common of these is a Late Fee. Some banks may give you a few days before charging a late fee, but many assess it the day after the payment was due. Companies may charge a fee such as $10 or a percentage, as much as 5 percent, of the minimum payment that was due. You can avoid late fees by mailing off your payment with plenty of time before the due date. If you decide to pay the bill at the bank's branch or ATM, check to be certain that it will take to process your payment on time. Sometimes payments may not be credited for a few days. 

Over-Credit-Limit Fees are another common charge. These are assessed any time you go over your limit, which means that you could be charged several times during the same billing period. The typical charge is $10 to $15 or up to 5 percent of the total amount you have charged over your limit. Keep in mind that these fees are added to any interest charges.

If your card has been lost or stolen more than once and you need a new one, some companies will even charge you a Replacement Card Fee. This could be from $5 to $10. Another good reason to keep track of your card!

Payments on Transferred Balances

After transferring a balance, you need to be certain to make all payments in full and on time. There is usually no grace period for repaying balance transfers, so the interest will add up immediately unless you have an introductory 0 percent APR.  And remember that those 0 APRs usually last only for a few months.

It is also important to understand that the payments you make will first be applied to the balance with the lower or promotional interest rates and then applied to the higher APRs. This means that you must pay off your 0 percent balance transfers before you can begin to pay the balance on any new purchases which may be charged a rate of 9 to 18 percent interest. You may want to consider using another credit card for any new purchases and pay off that balance monthly. It’s safest to keep your balance transfers on a separate card.

When Credit Reality Returns

Keep track of when the promotional period on your new credit card ends. As soon as it is over, the card’s normal variable APR will be applied to all remaining balance transfer amounts. What APR the card reverts to will depend largely on your credit history. If this interest rate is actually higher than the rate on your old card and you still have a balance, you may wind up actually losing money. You could always take advantage of a new balance transfer credit card offer, but you want to avoid a new addiction that could up catch up with you later.

Copyright © 2008 www.acclaimsecuredcards.com. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.