Balance transfer cards explained, at last

Yes indeed. But it's not all low credit interest and free lunches. There's one or two catches...

Balance transfers explained

Transfers move debt from one credit or store card to another, at a lower interest rate. They can help you escape massive interest payments courtesy of low interest on the transferred amount (typically 0 to 6%). Credit card transfer tricks

• Short term balance transfers. Some banks offer competitive balance transfers to win new business. Sometimes, they have less generous motives. Look out for Short term balance transfers. If you can't pay off the balance within this period (usually 6 months), the interest reverts to a much higher rate ? often 20% or more. Some credit cards offer transfers for the life of the balance, so you never revert to a higher rate.
• Purchase rates. Usually, the purchase rate is much higher than the special balance transfer offer ? again, often 20% or more. However, you will always have to pay of the low interest, balance transfer amount before you can make a dent in any high interest charges. So avoid purchases like the plague!
• Interest. This is a tad confusing, but here it is: Interest charged on your balance transfer (as well as on any evil purchases) acts like a purchase, and will itself attract a higher interest rate than your transfer. Again, you'll have to pay off the transfer before you can attack the accruing interest.