Credit card balance transfers: a good idea?

There are a number of things you can do to manage your credit card debts, and a popular method is a `balance transfer`: transferring your existing credit card balance onto a new card.

In many cases, the new card will have an introductory period in which no interest will be charged on the balance transfer, meaning the debt won`t grow in that time. Before that period expires, it may be possible to transfer the remaining balance to another card, and this can continue for some time.

But is using balance transfer deals to manage your credit card debts a good idea? And are there any drawbacks?

How credit card balance transfer deals can help

As a short-term measure for managing debt, there`s not a lot wrong with using balance transfer credit card deals. Because you won`t be charged interest for a while, you may be able to clear your debt more quickly - and spend less overall.

Some people choose to transfer their balance in order to delay repaying the bulk of the debt without allowing it to grow (although they`ll still have to make minimum repayments towards the debt). This can work, but you should make sure you know how and when you will start making repayments.

If you`re not sure how you`ll repay the debt, you could just be delaying a problem.

Why a balance transfer might not be a good idea

It`s important to remember that transferring your balance onto a new card is not really a long-term way of managing your debt. If you don`t start focusing on repaying the debt shortly after transferring the balance, you`ll effectively only be passing on the debt - and this means the debt remains a burden for longer.

There`s also a risk that you`ll be refused for a new card after a while, meaning you`ll be left with a debt that`s accumulating interest more quickly than you`d expected.

Also, keep in mind that even on credit cards with introductory periods, there will still often be a one-off fee - normally 2% or 3% of the balance - that could prove costly in the short term (and could add up over time if you transfer your balance multiple times).

In short, balance transfers can be a good idea, but only if you have a good idea of how you will repay the debt later on.

If you want more information on credit card balance transfers, or if you simply want advice on how to manage your debts, call one of our expert debt advisers on 0800 195 2911.

Tags: debt, balance, transfer, balance transfer, credit card

Our initial advice on your best financial solution is free. Fees payable when continuing service is provided. Calls may be recorded for training and quality purposes.