It’s holiday-shopping hangover season, and balance-transfer credit card offers are back — in a big way. But consumers may be newly wary of all credit cards in the wake of a spectacular security breach at Target that compromised the data of as many as 110 million shoppers.
Nevertheless, experts say, balance transfers can rescue consumers who loaded up their credit cards with $37 billion of debt in the fourth quarter, according to an estimate from credit-card website CardHub.com.
Consumers typically pay down debt in January, and the average American with a credit card carries a $6,700 balance. Balance-transfer cards, used wisely, can be a useful tool to reduce debt, experts said.
Common before 2009, these offers faded in the Great Recession as lenders pulled back. Now, balance-transfer offers are at a post-recession high, said Odysseas Papadimitriou, CEO of CardHub.com
“If you have credit-card debt, this is the best time to take advantage of balance-transfer offers,” said Papadimitriou.
As for those nagging security worries, the battles between retailers and banks that have delayed anti-hacking technology such as EMV chips — already standard-issue in Europe — continue.
“The technology we need is not happening any time soon,” said Al Pascual, Senior Analyst of Security Risk and Fraud at Javelin Strategy & Research. “Your best bet is to be your own advocate.”
With that in mind, here are some tips that can enable you to get the most out of a balance transfer:
• Look beyond the introductory rate. Papadimitriou said balance-transfer cards have three cost components: the introductory interest rate, the regular interest rate after the introductory period ends, and the balance transfer fee, usually around 3 percent.
• Make a budget and calculate how long it will take to pay down your debt.
• Use online credit card calculators to compare offers.
• Don’t use the temporarily low interest rate as an excuse to rack up more debt.