Why low-interest card hopping can hurt you

If you're not using your credit card but you want to minimize the finance charge on your existing balance you can transfer your balance to a new card with a low introductory interest rate. Many people have found this strategy helpful in paying down large credit-card debts.

However, before you begin low-interest card hopping, be sure to be informed. You have to evaluate cards carefully, and like any financial strategy, card hopping has its risks. Here are some tips to help you make the decision:

Be sure that the low interest that a credit card is touting actually covers balance transfers. Often when you read the fine print, you’ll find that incredibly low interest rates are only in effect for new purchases. Balance transfers are often at a higher rate.

Sometimes low introductory interest rates last for only a few months. Be clear about the time frame. Depending on how fast you plan to pay off the card, you may be better off keeping the card you have.

Be informed about any balance transfer fees. Cards offering low introductory rates often have them. Some charge a percentage of the transfer amount, which can be high if you have a large balance.

Some credit card companies also charge termination fees and retroactive interest charges lif you decide to close the account or transfer the balance to another card before a specified time period has elapsed

When you transfer a balance from an existing card to a new one, it's a good idea to close the account you're leaving. You won’t be tempted to use the card, and it won’t be an open credit line on your credit report. Closing accounts briefly lower your credit scores in some circumstances, too, so be sure to close an account no sooner than six months before seeking new credit.

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