Rolling Over & Transferring Credit Card Balances
Consumers may experience difficulty in finding a card that does not impose a low-fee balance transfer fee. Currently, 160 credit cards give people the option of transferring balances with fees ranging from 1.75 to 3 percent of the amount being moved.

Balance transfers are intended to recruit new customers with good credit. Borrowers cannot transfer a balance to a card that is owned by the current card provider. An account must be closed between 12 and 24 months, depending on the provider, before a borrower can be considered a new customer again.

Reason to transfer a balance

• For a lower rate.

Three options to consider to start getting out of credit card debt

• Transfer balance to a lower interest credit card. Some have higher interest rates, while others have lower rates. Cards can be compared online.

• Transfer balance from a high-interest card to one with a low introductory interest rate. Use only if plans are to pay off the balance BEFORE the grace period ends. If not, you might end up paying standard APR.

• Secure a credit card debt consolidation loan which involves consolidating all credit card debt into one easy payment at a fixed interest rate. This rate is almost always lower than the one the credit card companies give.

Downfall of transferring balance

• Interest will be charged at a higher rate on new spending than on the switched balance.

• Card providers require borrowers to pay off a transferred sum first before clearing any new spending.

• New debt will be building up interest at a much higher rate (negative order of payments.)

Questions about transferring balances

• How long does the introductory rate last?

• What are the minimum requirements to keep low rate?

• What’s the interest rate for new purchases?

• Is there a balance-transfer fee?

• How is average balance calculated?

• What will the rate be when it changes?

• What’s the difference between a cash advance and balance transfer?

• What’s the best way to transfer a balance?

• What about late fees and over-the-limit fees?

• How are convenience checks treated?

• What about new purchases?

• Do I qualify for the lowest rate?

• How is my information protected?

Alternate ways of paying off credit card debt

• Pay off the smallest personal debt first, then move to next smallest.
  For example, if you have a department store card with a $500 balance, a Visa card with a $2,000 balance and a student loan with a $5,000 balance, pay off the department store card first and then focus on the Visa debt.

• Double up or pay more than the required amount.

• Consolidate personal loans into a house loan and step up the payments. (This will work only if you stay out of additional debt in the future.)

• Consult with a debt counselor.

Reputable credit counseling agencies can offer real help and may be able to provide you with the help you need to get on the road to financial recovery. You should consider credit counseling if you:

• Feel financially overwhelmed and are unsure about how to address your current debt

• Are afraid that you are close to the financial edge and need help

• Are considering filing for bankruptcy

• Are consistently late on debt repayments or are unable to make debt payments

• Have creditors frequently calling and sending letters about the delinquent status of your account(s)

• Want to purchase a house but are unsure about the house-buying process

• Are late on your mortgage payments and are in danger of foreclosure

When choosing a credit counseling organization:

• Check to see if any of the agencies have had complaints filed against them by the Illinois Attorney General’s office or the Better Business Bureau

• Call the credit counseling organization and either talk with a staff member by phone or set up a time to meet in person

To make sure you are using a reputable organization ask about the following:

• Are you a certified 501(c)(3) nonprofit organization? What is your (EIN)?

• May I see a copy of your license to operate as a business in my county or state?

• What professional organizations/associations are you accredited by or affiliated with?

• What services do you provide?

• How are your counselors trained? Are they certified by any outside, professional organizations? What education or background do you require them to have prior to employment?

• What fees do you charge?

• How long have you been in existence and how many clients have you served?

• Do you have a list of references/clients that I could contact to ask about their experience with your organization?

• How are your employees paid? Do they receive a commission for “selling” me certain services or if I make a contribution to your agency?

• Are your services confidential?

• Can you provide me with some written material on your organization?

• Can I have a written contract for your services?

• Will I be assigned a specific counselor or will I work with more than one person on your staff?

• Who can I contact if I have questions outside of the counseling sessions?

• Who sits on your Board of Directors? Could you send me a copy of your most recent annual report?