Many credit card companies offer balance transfers with favorable terms. A balance transfer is when you transfer funds from one credit card to another credit card or debt. To get this process started call your credit card company for terms. You will be accessed a fee.

Fee Amount

When you do a balance transfer there is a fee, usually in the amount of 3 percent of the amount transferred. In the past, credit card companies would set a maximum amount that you could be charged. Many credit card companies have done away with that maximum limit to help increase their profits.

Effects

Balance transfer fees are added to your credit card balance on the next billing cycle after the process takes place.

Significance

Once the fee has been assessed to your account and added to your balance you begin to accrue interest on the outstanding balance including the balance transfer fees. This process takes place unless you received a zero percent rate with your balance transfer.

Expert Insight

Credit card companies are required to show fees as finance charges. When you receive your monthly statement you may see what appears to be an inflated annual percentage rate. It could be 65 percent or 72 percent or even more. This is because of the fees added in. Your next statement will reflect your accurate annual percentage rate.

Considerations

You have to do a calculation to see if it is worth your while to do a balance transfer. Many times you save money by receiving a low promotional rate, which lets you pay no or very little interest for a specified period of time. Compare the fees to the interest you would have incurred for the period of time the balance transfer is in effect.

Source:

MSN Money: Would a credit card balance transfer help?