What are Introductory Offers?

• Prior to making an offer, many credit card companies know what the consumer is currently paying in annual interest rates. Consumers with a good credit score may be offered a zero percent interest rate for a limited time, generally six months to one year on balance transfers and new purchases. Consumers must read the fine print to know for certain what the annual percentage rate (APR) on the account will be after the introductory period concludes.
  
  

What are the Advantages of Transferring Balances?

• Lower interest rates top the list of reasons to move the balance from an existing credit card account to a new card. Consumers with heavy credit card usage who carry a monthly unpaid balance may save a significant amount in interest charges by switching. The elimination or reduction of annual fees is another reason to consider a balance transfer. For example, a new credit card account that charges no membership fee compared with an active card that tacks on $100 per year to keep the account open can add to the attractiveness of switching accounts.
  
  

Are There Disadvantages to Transferring Balances?

• Credit card companies often charge the customer a transfer fee for absorbing balances from other accounts. Often, the fee is a percentage of the amount transferred. On large balances, significant transfer fees may end up costing the consumer more in the end than simply paying down the debt with the original lender. For example, a credit card account with a $10,000 balance moved to a new credit card that charges a 4 percent transfer fee would cost the consumer $400 upfront to transfer, immediately increasing the balance owed. In such circumstances, the cost of the transfer fee may negate the savings provided for by a lower interest rate.
  
  

What Should the Consumer Look for in a Balance Transfer?

• The fine print of any credit card agreement offered in the United States will inform the consumer upfront as to what to expect from the lender. Important terms to consider include how long the introductory interest rate will last and what the rate will jump to after the introductory period expires. In addition, consumers should consider potential activities that might change the APR. For example, a late payment may significantly increase the APR. Other considerations are annual membership fees and over-the-limit charges.