Balance transfers refer to the act of transferring the outstanding monthly balance from your existing credit card to another credit card offering better APR rates. Generally people are lured to a new credit card by the low to non-existent APR rates on balance transfers. Many credit companies even offer 0% APR on balance transfers.

When trying to determine whether or not you should transfer your balance to a new credit card, it is important to do a little research and ask yourself a few questions. First of all you should find out for how long the lower interest rate is applicable; in some cases it is for six months in others it is shorter. Next you have to find out what the regular interest charges will be once the time limit on the lower rate runs out - most of the time the rates offered by such credit cards is much higher than the rates offered by regular credit cards. Next you have to determine how long it will take you to pay off your outstanding balance. If you will be able to pay it off before the higher interest rate kicks in then you come out ahead. However, if paying off the debt is not an option before the higher rate starts, then you are probably better off sticking with your original credit card company.

If done properly transferring your balance to a lower APR credit card is a great way of paying off your debt while minimizing the amount of interest you pay on that outstanding balance.

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