Question:   After accepting first time credit cards, is it a good idea to transfer balances from a higher rate card to a lower rate card?

Answer:      Once you begin taking on new debt, be sure that you have examined all the information and disclosures.

A lot of people ignore the fine print, which is, in fact, the worst thing one can do when applying for a new credit card. If you fail to notice the APR (annual percentage rate), then you will be disappointed to learn how much you end up paying for that new blouse or pair of shoes.

Many times the APR is higher than 20%. Putting too much debt on your card and not paying it off every month will only lead to paying significantly more for the item.

Suddenly, those first time credit cards no longer seem appealing, do they?

Now, like most people across the country, you probably receive multiple credit card offers in your mail on a weekly basis. Perhaps you even found one that peaked your interest. Did it offer an attractive interest rate, no annual fees, or some sort of rewards program?

If you have any first time credit cards with substantial balances, moving the debt to another new card may be appealing. This could be especially true if your first time credit cards have interest rates as high as 20% or more, and the new credit card has a rate as low as 9%.

While very appealing, this is probably the best time to thoroughly examine the fine print on the new card. Is the low interest rate introductory? Will it jump to a rate as high as your current card(s) after a set amount of time? If so, transferring the balance is not a good idea.

Likewise, is this low rate for balance transfers only?

Do they have any fees for balance transfers? These fees may be high – making the benefit of transferring not worth the effort.

What is the credit card company’s policy on balance transfers? Some cards will take your payments and apply them to the transferred balance before applying them to any other amounts on the card. Other cards may act in an opposite manner.

Know the rules before you decide to play the game.

If you decide to move the balance, avoid putting any more money on the older card. In fact, close it out immediately to ensure you do not give in to temptation.

Remember, your goal for moving the money was to reduce the interest you had to pay, thus allowing you a better chance at paying off the card. More cards mean more opportunity to spend and run up additional debt.

Don’t play the debt game. Just like in poker, the house always wins.

» How does debt affect my employment, and will we ever see a debt free America?
If we lived in a debt free America, there would be no such issue or concern. Most potential employers do require you to sign a waiver that allows them to pull your credit report.

» Does it make sense to use gift credit cards so I earn award points, rebates or mileage?
Various gift credit cards, whether for cash rebates, mileage or points reward programs do not make using credit cards a good thing. The money, mileage or points earned will never be enough to justify the risk that in inherent to playing the credit card game.

» What’s the history of credit cards, and how do I distinguish between good debt and bad debt?
Debt is dumb, it should be avoided at all costs. Just look at the history of credit cards. Less than 50 years ago, it would have been shameful to buy on credit.

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