What are No Interest Credit Card Balance Transfers?

No interest credit card balance transfers allow people with outstanding balances on one or more credit cards to transfer the amount owed to a new card with a zero percent interest rate. In most cases, these cards also charge fees that differ depending on the amount of money being transferred to the new card. These transfers also open up some fascinating low-risk profit opportunities to people who don't mind taking a slight hit to their credit rating.

Significance

No interest credit card balance transfers are relatively new innovations. They have arisen in response to consumer demand for easy ways to delay paying interest on credit cards. The card companies make profit on these cards by charging up-front fees for transfer, but people who use them tend to end up spending far less than they would if they simply kept the balance on the existing cards, where they would often have to pay significant amounts of interest payments.

Function

The chief issue to watch out for when using no interest card balance transfers are the hidden fees that will sneak up and hit you if you miss a payment. In most instances, if you are late on a payment--even by a single day--the rates on the card will shoot up from zero percent to a high rate--often at 15 percent interest or more. This can make what was once a money-saving move into a costly mistake. If that happens to you, the best way to deal with it is either to pay off the balance in full or to simply conduct another zero percent interest rate balance transfer.

Features

No interest credit card balance transfers open up opportunities for a financial money-making technique called credit arbitrage. This tactic involves using multiple cards that have 0 percent introductory rates, maximizing the credit line on a cash advance and then depositing the check in an FDIC insured interest-bearing account for the duration of the introductory period. So long as the minimum balances are paid off every month, this allows you to profit from these introductory rates with almost no effort. The larger the credit line, the more profit that you can rake in.

Warning

The only major risk to credit arbitrage is that if you miss a payment, you could end up paying very high fees in interest and penalties. In addition, utilizing the majority of your available credit has a negative effect on your credit score, as does applying for many cards. Despite this, the hits to the score are not very significant for most credit users. So long as maintaining impeccable credit is not that important for you, this technique can be an excellent way to make money with little effort and almost no risk.

Considerations

The best zero percent balance transfer cards do not charge fees for transfer, instead only charging the conventional annual interest fee. These mostly offer the balance transfer deal to bring in new customers that they expect to continue using the card even after the introductory period has elapsed. Be sure to compare and contrast the rewards programs offered by various cards--another way to profit from zero percent balance transfers is to utilize them for reward benefits. So long as the minimum balance is paid off, these can further sweeten the deal for those who can handle using these cards responsibly.

Resources

• Finding a good deal on zero percent balance transfers
• Profiting from zero percent balance transfers
• Are you a zero percent balance transfer daredevil?