Credit card balance transfers refer to the act of transferring the outstanding balance of one of your credit cards into another card with a lower interest rate. Pretty simple concept, right?

Many people think of balance transfers as very beneficial in their attempt to reduce their monthly payments and get themselves out of debt. Which it can be. However, it’s not always a positive step. Just like most debt reduction plans, it will work for some situations, but not others. So consider all the benefits and drawbacks before you use balance transfer as your debt reduction strategy.

First, you should not just transfer the balance of one of your credit cards into another card that has low introductory rate without reading the fine print. This means that you have to be careful in choosing a credit card company that allows you to transfer your credit card balance to ensure that you will be getting a good deal. You need to consider the fees for making the transfer. Usually its worth it if the low interest period is at least 6 months. But it’s a good idea to figure out how much you will be paying, how much you will be saving each month, add it all up, and make sure you will be coming out ahead.

Second, you need to make sure you are able to pay on time. Usually you lose the low interest rate if you are more than 30 days late on one or two payments. If you tend to miss payments frequently, then you lose the benefits of the balance transfer. And the new rate may end up being higher than your old rate. So make sure that you have a system for paying on time so you don’t end up on the wrong side of the equation.

Third, it is also important for you to remember that credit card balance transfers don’t get rid of all your debts on their own. The concept behind the transfer is to lower your interest rates. And that can be a big savings, especially over the course of several months. But you are still required to keep paying your balances. So you need to write down all of your debts, factor in the new interest rates, and come up with a plan for paying them all off.

In your search for the best balance transfer card, it is important for you to read the agreement first so you know exactly what you are getting into. Check out the length of the introductory rate period, the annual percentage rate, the annual fees, the balance transfer fees, and the penalties if your payments are late.

If you want to get the best balance transfer card, then it is advisable for you to go for one with a zero percent balance transfer period. But sometimes you can get a slightly higher rate, for a slightly longer time period. So once again, write down all of your debts and do the math to figure out which option is better for you.

Finally, make sure to know when the low rate will end, so you keep transferring balances if needed, and save the most amount of money!