When it comes to credit repair and trying to maintain good credit you will often be faced with an opportunity to transfer your balance to a low or zero interest credit card.  Credit card balance transfers are neither good nor bad – it’s all about the context. Initially, a zero percent balance transfer sounds pretty appealing. Who doesn’t want to spend a few months or more with no credit card interest? But like all things, there are long-term consequences you should consider before making a transfer.

Pros of a Balance Transfer

Low or No Interest Rate The most obvious benefit of a balance transfer is no longer making the interest payment that you had been making. If your balance was high, with a high-interest rate, this could amount to big initial savings for the coming months. You could take those savings and put them into the balance and make some headway on paying down your card. If the promotion period is long enough, you may even be able to pay off the entire card before the period ends. Better Terms If you’re not thrilled about the terms on your card switching balances to a card with more favorable terms is a bonus. High fees and a short grace period are an example of terms you might not like so much. The card may also offer credit card rewards on your new purchases. Debt Consolidation When you consolidate your debt you end up making fewer credit card payments each month. Moving multiple credit card balances to a single credit card can eliminate the hassle of making multiple credit card payments each month. Some people feel less overwhelmed paying off one credit card versus several.

Cons of a Balance Transfer

Possible Higher Interest Rate Credit card companies don’t offer zero interest balance transfers because they’re trying to help. They’re a business, trying to make money. Most people do not pay off the cards, and many end up paying more interest than they did on the card they transferred. In addition, you may not even qualify for the promotional rate, typically you need to have excellent credit to get a zero percent offer. And once the promotion ends you might not like the terms of the card. It’s important to understand exactly what you’re signing up for. Balance Transfers Can Be Costly A lot of cards that offer a balance transfer charge a base fee plus percentage fee. The new low rate may initially sound appealing but when you consider the fees attached it may be wiser not to make the transfer. Make sure you look carefully at what you’re paying in interest and how far out you project it will take to pay off the debt. In the long run, sticking with your current card might end up saving you more. Your Risk of More Debt Increases Once you transfer your balance to a new credit card, you have more credit available. It’s very tempting to make new purchases on your old credit card when it has no balance. If you close the old card out to avoid temptation it could hurt your credit score because the card will no longer be contributing to your credit scores. Credit Repair Lesson As you can see, balance transfers come with pros and cons. Carefully consider your context and seek the help of a credit repair expert if you feel like you need some guidance evaluating all of the variables.