When should you seek out a balance transfer credit card?

If you're considering credit card offers and are carrying a large balance on an account you already have in your name, you may want to consider the benefits that a credit card balance transfer can give you.

Balance transfer offers are those for cards that initially carry a low interest rate - usually 0 percent - for a period of between three and 24 months, though they most often fall between six and 12 months.

Why they're good

This type of credit card offer can be extremely beneficial for consumers who have large bills on other accounts because it

allows them to make payments into that balance without accruing any additional interest charges

. That means that all of their payments go directly to the loan principal and reduce it more quickly.

During this time, it might also be a good idea for borrowers to increase the value of the monthly payments they were making into the account so that it gets cut more quickly. The sooner this is done, the sooner those funds can be contributed to other financial concerns.

What to watch out for

There are generally a few pitfalls to these cards, and for this reason, you should carefully review all credit card applications for balance transfer accounts before agreeing to one.

For instance,

the 0 percent introductory rate typically isn't applied to anything but the amount transferred

, meaning that purchases on the account will carry the standard ongoing APR outlined in the agreement. Further, nearly all balance transfers come with a fee of roughly 3 percent for moving debt from one account to the next, and this will have to be taken into account as well.

In addition, if consumers are not successful in paying off the balance transferred to the new account in full, then they

may find that the ongoing interest rate for the card has been applied to the remaining balance retroactively

. Depending upon the amount remaining that has gone unpaid, this can add up to a significant charge because it takes into account six, 12, or even 18 months of unpaid interest at once.

Before you fill out any credit card form, you should always take the time to make sure you fully understand all aspects of the account.