Lots of people get balance transfer offers in the mail. If you're in the process of paying down your debt, the low or no interest rates can be very attractive. However, all balance transfers are not created equally. You need to evaluate your options before you take the leap and make a balance transfer. Here's what to look for.
Consider More Than Just the Interest Rate
Mike Sullivan, director of education with Take Charge America, says that it's important to consider more than just the APR when looking at a balance transfer card. "A lot of times people just look at the balance transfer terms and that's a mistake," Sullivan says.
He says that people need to look at fees, as well as the APR after the introductory rate runs out. Annual fees might erode a lot of the value of the card, and the initial rate offered in your letter might not be what you actually get.
"If they say you're pre-qualified for $10,000, you're probably not actually going to get $10,000," says Sullivan. You'll get your rate when you actually get your card in the mail. That's important, because you might not be qualified for enough to transfer everything you need onto the new card. What's more, even if you can transfer everything that you need, it might make your credit utilization so high that you'll negatively impact your credit score. Once you start paying down your debts, your utilization might go down, but you need to be ready to take an initial hit.
Know the Terms of the Transfer...