Credit card balance transfers can pay, if you follow the rules

Last year was all about change. But one thing that continued was credit card issuers’ generous balance transfer offers.

According to a survey by CreditCards.com of 100 credit cards, nearly all of the 89 that allow balance transfers charged 0 percent interest, most typically for 12 months. Some do better, like Citi Diamond Preferred Card, which boasts 0 percent interest for 21 months. The most common fee was 3 percent of the amount transferred, or $5, whichever is greater.

So, are balance transfers a good idea?

They “can save you a huge amount of interest and shorten the time it takes to knock down your debt, if used wisely,” says Matt Schulz, a senior industry analyst at CreditCards.com.

• Behave: “If you make a late payment, you can risk losing your 0-percent deal. Some credit card companies will pull the promotion after one missed or late payment. Then you may be hit with a higher interest rate than a normal credit card — as well as a late fee,” warns Leslie Tayne, a Melville attorney specializing in financial issues.
• Understand the game: “Be aware that if you are carrying a high balance when your promotion ends, you’ll start accruing interest. This can be a costly mistake,” Tayne says.
• Protect your score: When you open a new card, you add a “hard inquiry” to your credit file, which temporarily lowers your credit score. Says Robert Harrow, a senior credit card analyst with ValuePenguin.com, a Manhattan consumer research site, “If you plan to apply for a loan soon, getting a balance transfer credit card shortly before that may cause you to get higher interest rates on that loan.”