I have many posts about how to profit from credit cards. I mention a lot about the sign up bonus opportunities here at mycardblog.com. But I actually miss a lot about how to profit from credit card balance transfer offers. The primary reason why I don’t mention a lot of credit card balance transfer is different credit card issuers will target to different credit card members. Thus different people might qualify for different balance transfer offers. The credit card balance transfer is not so easy for many new to credit card game. I have a series of posts on how to do balance transfer.

But I’m still receiving some emails inquiring the credit card balance transfers. Some readers are keeping receiving the balance transfer offers from credit card issuers. And they don’t know how to deal with them? jump or not jump? Profitable or not profitable? This post: Win A Balance Transfer Game is kind of a brief guide to the balance transfer game.

What’s credit card balance transfer?

A balance transfer is the act of transferring balance from one credit card, usually with high interest rate, to another credit card which is supposed to have better terms and rates. When you receive a balance transfer offer, you will be informed with the following items: offer rate, offer duration, and transaction fee. Please be noted that when you have many items with different interest rates on your credit card statement, usually your payments will be applied to lowest-rate balances first and highest-rate last.

Why are you receiving balance transfer offers?

Credit card merket is very competitive today and is a big business. Credit card companies are making a lot of profit from finance charges. The national average APR on credit card is about ~15% which is significantly higher than any other financial products. With that kind of interest, it’s tough to pay down a credit card, because it is consistently charging interest and adding to the principle. Unfortunately, it’s normal for American households with credit card debt to carry balances of $10,000 or more on credit cards. A typical family has to pay more than $1,000 in interest charges on credit cards each year. This is much more profitable than the transaction fees. In an effort to lure consumers to their credit card, many companies offer balance transfer offers to your credit card. And you might become one of the money machines for them in the near future.

Would the balance transfer work for you?

Balance transfer credit cards are very popular credit cards. It can be an emergency fund for you if you are short of cash for a while. Or it can give you some profit from the interest rate difference between a high rate savings account and you credit card offer. For a savvy consumer, this can be an excellent method to reduce credit card debt.

Looks good but you have to watch out……

You should always bear in mind that credit card companies aren’t making these offers out of the goodness of their hearts. They are gambling that they’ll win. They are wait for you to fail to pay off your balance or neglect to switch your balance to another credit card before the grace period is up. So to win the balance transfer game, diligence is required. You also have to read carefully about the fine print.

You should be shopping for the following features:

Low interest rate offers: A 1% APR will cost you a lot of money in a 1 year period if you carry a lot of balances. Some credit cards come with 0% APR promotion with short duration time (3~6 months). You should consider a step ahead before you jump for it.

Low transaction fees: Today’s balance transfer offers always come with a 3% transaction fee. Some with a cap some don’t. You should read carefully about the offer before you use the balance transfer checks. The American Express Blue and Blue Cash Card offer great 4.99% fixed interest rate without any transaction fees. If you are short of money, they are good choices.

Annual fees: Of course, you want a credit card without any annual fees.

Sign-up bonus/other rewards: Well, this is a great additive for me to jump the offer. The Citi Dividend Platinum Select Card and Citi Diamond Preferred Rewards Card are offering balance transfer bonus for making a balance transfer larger than $1000.

At last, as a kind reminder, please don’t forget to minimum balance to your credit card every month. Pay late only once and you will fall into the debt hell.