Balance transfer can cut credit-card debt.
Bills for holiday buying come due, it may be a good time to consider a credit card balance transfer.
By taking advantage of introductory-rate card offers, debt-strapped consumers can slash double-digit interest rates to as low as 5.9 percent for as long as nine months. By transferring balances again, or by negotiating an extension of the "teaser" rate, consumers can keep rates low indefinitely.
"A balance transfer is a wise, strategic move that enables you to reduce debt," said Robert K. Heady, founding publisher of Bank Rate Monitor in West Palm Beach, Florida, which tracks bank and interest rates.
Introductory card rates are so attractive that some entrepreneurs are turning to credit cards and away from more traditional means of business financing.
Of course, even the low introductory rates of credit cards won't be as attractive for many consumers as some home-equity loans, which have the advantage of tax-deductible interest payments. The national average for a 10-year fixed home equity loan is at 9.52 percent, according to BanxQuote Inc., a New York-based financial information company.
But consumers need to be homeowners to get these loans in the first place, and then must have an adequate amount of equity in their homes. So for many borrowers, credit cards remain the best alternative.
Consumers are facing a growing pile of debt and are looking for the fastest and least expensive way to pay it off.
Competition among lenders is fierce, making credit card companies increasingly willing to offer lower initial rates and for longer periods of time, along with other perks to entice customers.
To be sure, borrowing from Peter to pay Paul isn't without its risks. Having multiple open lines of credit might make it harder to qualify for loans or a mortgage in the future.
Still, playing the balance transfer game doesn't have to mean a tarnished credit history.
Financial planners and consumer advocates recommend finding out the terms of the transfer_for example, whether there are any fees attached and exactly how long the teaser rate will last.
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