Credit cards aren't all bad. Play your cards right, and they can be a tool for getting out of debt, instead of a drill that drives you deeper under. By transferring a balance from a higher-interest rate loan to a low-interest rate card, you can effectively shave hundreds -- even thousands -- of dollars from your loan.
But before you play the field, read the fine print.
Discover what the offer applies to
Balance transfers? New purchases? If you plan to use the card to move an existing balance over, make sure the balance you transfer falls within the credit limits of the new card.
Find out how long the low rate lasts
In the best offers, the rate applies for the life of the transferred balance. But those are rare, particularly these days. So look for one that lasts for a reasonable period of time. Six months is a good starting point.
Make sure you qualify
The best place to start looking for a better deal is in your wallet. Start with your current lender, and negotiate for a lower interest rate. If you don't get a satisfactory deal, start shopping around. Although lenders have tightened their requirements, consumers with good credit can still snag a deal.
Be diligent about paying your bill
Make payments -- hopefully more than the minimum amount due -- on time, or else you can pretty much kiss that low rate goodbye. Lenders are always looking for a way to eke out more money from you, whether through interest or late/penalty fees. Late payments are just one event that'll give them a reason to hike up that interest rate. A couple of missteps, and you could ruin your credit for a while.
Avoid putting new charges on the card
Most of the time, new purchases are subject to a higher interest rate. Plus, they will be the last charges to which your payments will be applied. That means that if you take your time paying off the $10,000, but have put another few grand on the card at 14% interest, your payments won't touch the new charges until the old, lower-rate ones have been paid down. You don't want to accrue interest on those new charges for any length of time.
If you plan to move any remaining balance over to a new credit card once the special rate expires, make sure you line up the new line of credit ASAP. And before you cancel that old card, read our rules for juggling multiple credit accounts.
For more tips on managing your credit, check out: