Transferring Your Credit Card Balance To a Balance Transfer Credit Card

Transferring your credit card balance is one option if you have a credit card debt and you are unable to pay it off. Your other options are to suffer the interest rate that is killing you, declare yourself bankrupt, or leave the country.

However, before you decide on transferring your credit card debt to a new card with an introductory low interest rate, there are some points to consider. Useful questions to ask your new credit card provider when transferring your credit card balance:

1. What is the standard APR (annual percentage rate)?
If you have little intention of clearing your credit card debt within the introductory rate period, then it will eventually revert to the card provider’s standard APR. If this is higher than your existing card, there may be little point in transferring your credit card balance in the first place, especially when you take into account any balance transfer fee and the annual fee for possessing the new card.

2. Does my introductory interest rate apply to everything?
This is unlikely. Most introductory interest rates apply only to the amount you are transferring from your existing credit card. Purchases will normally be charged at the regular APR, and cash advances will simply destroy you, as these carry much higher rates, as do purchases made by credit card cheques.

3. What are the other features of my new credit card, and are these jeopardised by other actions I may take?
As above, your introductory rate is specifically tailored to your balance transfer amount. Make sure you understand how everything fits together, and whether certain features impact the effectiveness of others. After transferring your credit card balance, you may be expecting free travel insurance, reward schemes and more, but some of these can be negated by how you use the other available features of the card.

The reward scheme on your card could not only be charged for, but also then made fairly worthless when various restrictions are taken into account. It can all end up very confusing, so your best bet is to go against your natural instinct and actually read the Terms & Conditions.

4. Will transferring your credit card balance run smoothly?
This is an unknown quantity. The worst-case scenario is that there is a delay in the transfer, and you end up being charged interest by your new provider from the date the transfer is approved, whilst still paying interest on your old account because the transfer has not actually taken place yet. If this happens for a couple of weeks, any financial benefits from transferring your credit card balance may be made void.

5. Is my credit card limit enough to accommodate my balance transfer?
You need to know that your allotted credit limit is big enough to cover your balance transfer. If not, you will not be able to transfer the whole amount, and the extra fees involved in transferring a balance may mean that transferring any smaller amount is no longer financially viable.

• Comparison of Top 10 Credit Card Offers

Editor's Choice: Our Top Credit Cards

Credit Card	Card Details	Interest Rate (p.a.)	Cash Advance Rate (p.a.)	Balance Transfer Rate (p.a.)	Annual fee	Interest free days (up to)
HSBC Credit Card	Editor's Choice: 0% for 6 months Balance Transfer & No Annual Fee Featuring a $0 annual fee for life, and 0% p.a. balance transfer for 6 months, the HSBC Credit Card was voted the Best Transactor Credit Card for 2010.	16.99%	20.75%	0% for 6 months	$0	55
Suncorp Clear Options Standard Visa Card	A great 12 month balance transfer offer, combined with a low annual fee and a good interest rate on purchases.	12.24%	17.99%	1.9% for 12 months	$39	0