Three Reasons Why Low Interest Credit Card Transfers May Put You in Debt

credit cardMany of us seek to take advantage of those low interest credit card transfer offers. With a low interest credit card transfer offer, you can take the debt you have on one credit card and move it over to a new card that gives you a lower rate of interest. With lower interest, you will save more money, right?

If your credit score is still decent, you will find yourself getting a lot of these offers in the mail. Switching from a 12 percent card to a five percent card seems like a great way to speed up your recovery from debt, but before you make the move, consider three pitfalls to the low interest credit card transfer that may actually put your further into debt.

1. The Transfer Fee

Did you know that most credit cards will charge you a transfer fee of four percent on average? It is right there in the fine print. This means that for a $10,000 credit card debt, you will pay $400 when you transfer it. This money is extra and does not go toward paying off your card! You may be better off applying that fee directly to your debt.

2. The Teaser Rate

While that five percent certainly sounds great, keep in mind that it won’t last forever. In fat, it may be raised anywhere from three to six months after the transfer. If you are late on a payment, even one date late, the teaser rate may be voided immediately. This means you could wind up with an even higher rate than the one that you left with your previous card. Make sure you know when the teaser rate expires, what the new rate will be, and what other factors might change the rate. Then decide if the transfer is worth it, such as if you could pay off the card before the rate changes.

3. The False Security

Transferring your balance may give you a sigh of relief and take some of the pressure off of your debt. Plus, if you never actually close the old card, or if the new card has a higher limit, you may have more credit to use. The extra credit combined with the false sense of security means that you may continue to ring up new charges, further adding to your debt.

Think carefully before you decide to take advantage of low interest rate credit card transfers. They may not be worth pursuing and may actually be harmful to your get out of debt goals.