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Smooth Moves with Balance-Transfer Credit Cards: 8 Tips for Paying Off High-Interest Debt

by Barbara Marquand

Used wisely, 0 percent balance transfer credit cards boost efforts to pay off high-interest debt. These cards do just what their name implies. They charge no interest for a certain period on balances transferred from other credit card accounts.

Follow these eight tips to make them pay off.

1. Weigh balance transfer credit card fees.

Most cards charge a 3 to 5 percent fee for the transferred amounts. For a transferred balance of $5,000 -- that's $150 to $250. Is the interest rate reprieve worth the hefty fee? Do some calculations to make sure. Some cards come with a minimum transfer fee as well as a cap on the fee. Read the terms and conditions for details.

2. Read the credit card rules for balance transfers.

Make sure the transfer is allowed. For instance, you cannot transfer a high-rate balance from a credit card that's owned by an affiliate of the same company that's offering you the new deal. Credit card companies want to lure you away from the competition with these deals, not simply shift your business between their own products.

3. Watch your credit card limit.

Although you can usually transfer as many balances as you wish, the grand total -- including the transfer fees -- must not exceed your new credit limit.

4. Pay down credit card debt quickly.

Zero interest won't last forever. Read the terms and conditions to learn when the interest rate will rise to the standard level, and then pay down as much as possible during the introductory period.

5. Get credit card balance transfer confirmed.

Continue paying your old credit card company until you get written and/or electronic confirmation that the balance transfer has been approved.

6. Wait until disputed credit card charges are cleared.

Don't transfer a balance that includes a credit card purchase under dispute, or you could lose your rights to dispute the bill.

7. Pay credit card bills on time.

Keep your account in good standing. The credit card company could revoke the promotional interest rate, and you rack up late fees if you skip payments.

8. Control new credit card spending.

Focus on paying off your debt. Otherwise, once the regular interest rate kicks in, you're right back where you started.

A low-interest balance transfer credit card is a great tool for improving your finances as long as you understand the terms and use a disciplined approach for paying off your debt.

Published 07/13/12

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