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0% on balance transfers! How many times have we seen the big “0″ on various flayers, TV commercials and posters? Probably a million. A lot of people get very excited when they receive a “0% APR on balance transfers” offer, because it can save them money with high-interest balances. Unfortunately, however, most of the time there is a “fine print”. And that is where it can get really ugly if you are not careful.

The first thing to watch for in a 0% AR transfer is the grace period. Usually you will be given a 0% APR for 6 or 12 months. This where you are saving - you won’t be paying interest for half an year or a whole year - it can spare you hundreds and even thousands on higher balances. But be careful - one missed payment on any of your credits (including mortgages, insurance, even a phone bill) can kill your 0% APR.

The second thing is associated fees. Some credit card companies will charge a set-up fee, an annual fee (also sometimes called “participation fee” or “program fee”) or also a transfer fee. The transfer fee could be a percentage of the funds transferred or a flat amount. A 5% fee on $1,000 transfer will cost you $50. Rarely, some companies only give you the promotional APR for your initial transfer only. Watch out, if your fees are high, the balance transfer can cost you more than you have expected and bury you.

Third, penalty fees on these cards are usually higher than normal. Once again, one slip-up can ruin your savings plan. Check what the APR is after the introductory offer is over. If you are planning on shopping with this card inquire what the APR you get for purchases. Yes, you are getting a 0% APR but is it on transfers, on purchases or both?

Final thoughts: Balance transfers can potentially save you a lot of money, you just need to be careful. Make sure that you read and understand the fine print, and keep your accounts current.

Tags: balance transfer | apr | credit | debt | saving | fine print | introductory apr