10 Things You Should Know About Credit Card Balance Transfers

4. You can simplify your finances

Another selling point of balance transfer offers is that they provide a way for you to streamline and simplify your finances. Instead of making multiple payments to several credit card companies, it may be easier to combine or consolidate your debts onto one card. This way, you only have to worry about paperwork and payments for a single account.

THE BAD

5. You'll pay a fee

Unfortunately, credit card balance transfer offers aren't typically free. Most of the time, you will have to pay a fee based on the amount of the credit card balance you transfer. Fees can range from 2 percent to 5 percent. On most balance transfer cards, there is no cap, meaning that the more you transfer, the bigger the fee.

"A typical fee in 2013 is 3 percent, so if you transfer a $10,000 debt from another card, you'll pay a $300 fee right away," says Ben Woolsey, director of marketing and consumer research for CreditCards.com. "Even if you have the cash to do so, it might or might not be worth it, depending on how much money you'll save on interest over the life of your debt."

You might want to crunch the numbers first. CreditCards.com features a balance transfer calculator that allows you to see what the costs are.

6. Not everyone qualifies

Another drawback about balance transfers is that not everyone will qualify for these deals. Banks and credit card issuers usually approve balance transfers only for people with good credit ratings. So unless your FICO score is in the 700 range or better, you might have a tougher time taking advantage of a balance transfer. Another problem for those with average credit profiles: Even if you do get approved, the credit line may not be as large as was initially advertised or as big as you'd hoped.

7. You may lower your credit score in the short run

Applying for a new credit line generates an "inquiry" on your credit report, which usually dings your credit score for a short time. Even if you just shift debt around — as opposed to adding to your debt levels — your credit may still be affected. Because of quirks in the credit scoring system, your credit score may take a hit if you load up all your debt onto one low-rate credit card and max out (or nearly max out) a single card.

The good news is that over time, a credit card balance transfer can give your credit score a boost. This mostly occurs because you have an additional credit line open and more credit at your disposal. And the more available credit you have and are not using, the higher your credit score.

8. The "deal" is only temporary

Credit card issuers know they can attract new customers by tempting them with zero percent interest deals for a period of time. While a zero percent offer sounds good, realize that it won't last forever.

Most of these "teaser" rates last for about six months; some may be as brief as three months. More generous zero percent offers may last for 12 to 18 months. Look carefully before making your decision.

9. Some offers aren't exactly what you think

The timing associated with a low-interest-rate credit card deal is especially critical if what you're really being offered is a deferred interest card, as opposed to a zero percent interest card.

"Some card companies have deferred interest cards that may look like zero percent cards but are not," says GreenPath Debt Solutions counselor David Flores. "Interest accrues on deferred interest cards, but you are not charged the interest if you pay off the balance in full by the zero percent deadline."

By the end of the promotional period, "if you do not pay off the balance," Flores adds, "the interest is capitalized onto your remaining balance so, in the end, you end up paying a high rate on a higher balance than you originally had."

10. Some balance transfer "deals" are scams in disguise

While most offers for credit card balance transfers are legitimate, some balance transfer "deals" are actually financial scams.

In recent months, the Federal Trade Commission has shut down at least a half-dozen credit card scams that falsely promised unsuspecting consumers zero percent or low-rate credit card balance transfers. Instead, those consumers got fleeced, authorities say.

In one scheme, a company called National Card Monitor LLC charged people between $499 and $599 in up-front fees in exchange for allegedly securing a lower-rate credit card on the customer's behalf. National Card Monitor even offered a "100 percent money back guarantee."

The problem was that the low-rate credit cards touted by the company never materialized. When customers tried to get refunds, they were stonewalled.

The lesson? Avoid paying up-front fees for any product or service. And be sure to read the fine print of any credit card offer before agreeing to the deal.