Balance Transfer Offers Explained - Page 1 of 2

  Balance transfers have been one of the biggest selling points of credit cards in recent years, offering the promise of saving money by reducing or even avoiding interest payments on your credit card debt.

  If you've not yet taken advantage of the various offers out there, it makes sense to know exactly what the available deals involve.

Introductory 0% Periods

  The original and still most common transfer deal is the 0% offer, limited to an introductory period of a few months, often six.

  With this kind of offer, once you've been approved for a card you have about 6 weeks during which to transfer your balance from another card on to your new one (credit limit permitting, of course).

  This clears what you owe on your old card, and for the next six months (or however long the introductory rate lasts for), you won't have to pay any interest on your debt - in other words, 100% of your repayments will be used to clear your balance.

  Once the introductory offer period is over, you'll pay interest at the card's standard rate.

  The large number of cards offering 0% intro deals gave rise to a kind of credit card user known, somewhat unkindly, as the 'rate tart' - a serial balance transfer offer user who moves their debt from card to card, always within the 0% periods, and so avoiding paying interest on their debt so long as there are new cards to apply for.

  The danger with this scheme is that if you are not disciplined enough to cancel your card accounts once the introductory period has ended and you've transferred the balance out, then you can end up with a huge credit line and the temptation to get into heavy debt. And, of course, you need to repay your balance sometime.