Are Zero Percent Balance Transfer Credit Cards Truly Free?

Is paying off credit card debt with zero percent balance transfer credit cards a good idea? Many people seem to think so when they see the large number of credit card promotions. Credit card companies know it will attract new customers who have debt to transfer. But where is the value to the company offering the credit card with zero interest?

When considering a credit card promotion and it sounds like a good deal, it's best to look closely at the fine print. All zero balance transfers are typically only good for a very specific length of time, a few month is common. If you are several thousand dollars in debt with a higher interest credit card and are interested in taking advantage of a zero percent balance transfer credit cards, the credit card company is betting you will still have a balance after the promotional period is over. After several months and the promotional period is ends, whatever balance remains will being earning interest, and some credit cards companies figure interest on past balances too.

A very common mistake people make is not checking what the interest rate will be after the promotional period ends. For example, you are transferring a balance currently being charged 9.95 percent interest could end up with a rate of 24.95 percent interest after the promotional period ends. Now, if you are able to pay off the balance during the zero interest period, you did well. But, as most people if you are will not benefit financially over the long term and have to start looking for another zero balance transfer offer, or pay the higher interest until the balance is paid off in full.

The other often overlooked factor of zero percent balance transfer credit cards is that most of them charge a transfer fee. The fee is in the range of a few percent on the amount transferred. This fee can add up though, depending on how much money you are transferring. In some instances the amount you pay in transfer fees will be more money than if you just had just kept the balance on the original card in the first place.

To ensure you are getting a good deal, you will need to check the numbers and determine how much you will spend for the life of the balance with the current credit card, or if you move it to one of the zero percent balance transfer credit cards. Also, don't forget to factor in a transfer fee and the interest rate at the end of the promotion. Don’t just jump into what looks like a good offer.

Zero percent balance transfer credit cards offer may be good as long as you make your payments on time. This is important to keep in mind if you sometimes have difficulty keeping up with your payments, because if you just send in one payment a few days late you can lose the zero interest rate only to end up with a much higher interest rate.

So, before you jump at an offer, check out how long it is good for, what the interest rate will be after the offer and whether making the transfer in the first place is a good idea. One last thing, credit card companies are onto people who continually transfer their balances to a good offer or low interest rate credit card and if you make too many they may deny you and charge you the higher rate right from the beginning.

My advice to everyone, get rid of credit cards – you don’t need them. Cash is King!

Additional Resources:

From Debt To Wealth: Get out of Debt, Repair your Credit, and Accumulate Wealth!

101 Ways to Get Out Of Debt and On the Road to Wealth

Pay It Down! : From Debt to Wealth on 10 a Day

The 9 Steps to Financial Freedom With Suze Orman (DVD)

Suze Orman: The Road to Wealth (DVD)

Sustainable Wealth: Achieve Financial Security in a Volatile World of Debt and Consumption

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