Credit cards have become extremely popular, and nowadays almost everyone has one.

Although there are many benefits to using credit cards, you have to use them wisely, or you will have to pay mounting fees and face many problems. Balance transfers are sometimes a great solution to certain credit card issues, but they are not without their own drawbacks.

Benefits of Balance Transfers

Benefit #1: Lower Interest Rates

If you do a balance transfer with a credit card that offers 0% interest rate, this can save you money in the long run. If one of your credit cards has a high interest rate, or if the credit card’s interest rate is continually increasing, then a balance transfer is a great idea. By transferring your balance to a credit card with 0% or a lower interest rate, you won’t have to deal with high interest rates anymore.

Benefit #2: Consolidating Debt

Another benefit of balance transfers is being able to consolidate your debt. You can put it on just one card so that you don’t have several credit card bills hanging over your head. It makes things simpler to focus paying on one credit card instead of several.

Benefit #3: Enjoying Other Perks

Another benefit of balance transfers is the ability to enjoy the other perks that credit cards offer. If you move your balance to a card that offers a longer grace period or lower or no annual fees, then you can benefit from these additional perks.

Drawbacks of Balance Transfers

Drawback #1: It Could Become Expensive

If you don’t look through the details when you transfer your balance, you could end up paying more. Just like any credit card services, if you don’t keep up to date with your payment, you will have to pay high fees that will cost you a lot. You usually end up having to pay a certain percentage of the total amount you’re transferring. Adding this to potential credit card fees ends up being pretty expensive.

Drawback #2: Potential Damage to Your Credit Rating

If you’re not careful, doing a balance transfer can actually damage your credit rating. If you transfer your balance to a credit card that is almost full, then your credit rating will drop if the new balance goes 30% above the credit card’s credit limit. This is because most cards will automatically knock your credit rating down once you’ve gone too far above the credit limit.

Just like when you are applying for online loans, once you do a balance transfer from one credit card to another, you need to be vigilant and be informed. Balance transfers involve taking all the money owed on one credit card and moving it to another. By doing this, you can enjoy the benefits it offers like lower interest rates and other perks. However, it’s important to transfer your balance carefully, or you could suffer drawbacks including a lower credit rating or having to pay a lot of money.


  1. Great advice, if done properly, 0% balance cards are an absolute MUST in debt repayment.

    In the UK, there is currently a card which offers a 33 month 0% period with upfront fees of only 2.79%. If you spread that 2.79% to make an effective APR, the interest rate is only around 1% per annum! If you are sure you can pay down that debt after the 33 months (make sure you set several calendar reminders!!), then these deals pretty much trump any other form of debt consolidation.

    However, if you don’t pay it off in time, your interest rate shoots up to 19%. Its not the case on this specific card, but for many cards, they will then retrospectively charge you the interest over the entire period on your balance if you haven’t paid it off in time.

    Great tool, but just be careful…!

  2. If you are in debt on a high percentage card it makes perfect sense to balance transfer to a lower or zero rate if you can. Just make sure the 0% rate is as long as possible, and watch out for the transaction fee which most apply nowadays which can be 2-4% (effectively making 0% not actually 0%, but still better than 20%+!!!). Then make sure you have a solid plan to pay it all back before the introductory rate runs out.


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