I've a reasonable credit card debt and am paying a high interest rate. Is there any downside to me moving the debt from one interest free credit card to another to take advantage of the introductory offers?
It is possible to reduce the interest charges you pay on credit card debt by taking advantage of nil-interest rate balance transfer deals. At any one time there are always a number of these deals available. They allow you to focus your attention on the repayment of capital rather than servicing the debt through interest payments. There is even a name for people who use this strategy. The credit card companies refer to them as 'rate tarts'.
There are, however, some potential downsides to consider. Firstly, the nil balance transfer rate will not last forever. If you don't manage to repay your whole debt by the time the offer period finishes then you will need to either suffer a relatively high interest rate or shop around again to find another deal.
Secondly, the credit card companies are starting to wise up to rate tarts. Many have now introduced a balance transfer fee. This is typically 2% of the amount of the balance transfer and can act as a real disincentive to move your credit card debt more than once.
A more attractive alternative to lots of shopping around for nil-rate deals might be to find a credit card that offers a consistently low interest rate for the life of the balance transfer. This means that the low interest rate applies for as long as you are paying off the balance transfer debt. This option means you don't have to worry about your offer period coming to a close, but it gives you less of an incentive to clear the debt by a certain date.
(Information is intended for guidance only and is offered without any legal responsibility. None of the information provided constitutes any form of recommendation and is not intended to be relied upon by you in making any investment decision. You should always obtain independent professional financial advice before making any investment decisions).