by Moe Zilla

Created on: July 08, 2010

I once got what seemed like the best possible deal for a balance transfer. DiscoverCard offered me a 0% rate - but unfortunately, there was a catch. I had to make two purchases during each and every statement period, or they'd revoke my 0% rate, and immediately start me at a punitive 22% annual interest rate (or something equally ridiculous). Fortunately, I found a simple trick that turned this into the best possible deal for a credit card balance transfer. I used that credit card to set up two automatic payments each month - and then I'd never forget to make the purchases that'd keep my interest rate at zero!

Interestingly, after over a year of carrying this zero-interest balance, I actually screwed up with the scheduling one of the purchases. (Because the date fell on a three-day weekend, it got pushed into the next payment period - which meant I'd lose that coveted 0% rate.) I called Discover, and their customer service agent was actually very helpful. They collected a larger-than-usual fee for that month - which came out to about 2% of the remaining balance - but they still returned me back to the 0% rate, where I continued until I'd paid off the balance in full.

That may be one of my best experiences with a balance transfer - but don't forget that there's still a fee to set them up. Chase recently offered me a credit card with a 6-month, zero-interest balance transfer offer - but the upfront fee for setting up the balance transfer was nearly three percent! It's still a good deal if you can't find any other way to lower your interest, but watch out for some of Chase's other sneaky practices. I once called a Chase representative asking about their "Payment Protection Plan." (Basically, they promise to defer your monthly payments if you're ever unemployed or laid up for a medical emergency.) I'd read horror stories on the web about people who claimed they'd paid the monthly fees, only to discover some problems when they tried to take advantage of the offer. I didn't know whether those stories were true, but I wanted to take a good look at the terms of the agreement.

Months later I noticed that Chase had already applying the fees to my credit card statement. "Wait a minute," I said. "I never signed up for this program!" Chase admitted as much when I phoned them, but - if I heard them right - said they automatically signed you up for the program even if you'd only requested information about it. Their rationale was that this constituted a complementary "trial" of the program, though to me it just seemed sneaky!

There's some good deals out there for credit card balance transfers. But the credit card companies are ultimately trying to get more of you money - so you've got to keep an eye on them!

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