By: CCN.com

One of the most adopted ways of debt reduction is balancetransfer. A lot of people, however, also use balance transfersas a mechanism to continue their journey into the debt trap.Here we are going to talk about the scenario where you areactually using balance transfers as debt reduction mechanisms.

Newspapers, magazines and television are all full ofadvertisements on balance transfers. Almost all credit cardcompanies offer balance transfer propositions especially toattract new customers. So what steps should one follow inselecting a credit card to transfer current balances to? Here isa list of steps which will prove helpful to you:

Collect all the information about balances that you currentlyhold on different cards and the APRs applicable for each.Prepare a matrix and ranking of what debt you want to transferto the new credit card. This will generally be based on thebalance on each credit card and the APR.

Collect the information about the various offers available inthe market including the eligibility or qualification for eachoffer and the applicable APR, terms of low rates, fees etc. Youmight want to limit yourself to the leading credit cardcompanies. Eliminate the offers on the basis of your eligibilityfor the offers. From the remaining offers, prepare a matrix ofimportant information and key features. You can include onlythose things which are of most importance to you. These willinclude things like:

APR The application fees The period for which the low APR isavailable The process followed for APR calculation on futurepayments The long term APR Annual charges Any additional chargesAny riders on the service in terms of minimum requirements Modesof payment acceptable If any of them have tie-ups with anairlines/car-rentals/hotel etc which is of your interest.Evaluate the matrix on the basis of the collected informationand apply for the card most suited to you

Besides balance transfer on your current credit cards, you canalso transfer your other high interest debts e.g. car loans orother loans. This is done by means of the credit card companyissuing balance transfer checks. Sometimes these checks carry anissuance fee and it's prudent to check this beforehand. All suchfees and other charges can easily turn the best looking optionto worst. Always read the fine print especially the clausesrelated to fee structures etc. Some credit card companiespresent information in a way that looks very lucrative in thefirst instance. However, when you read the minor details, youfind that it's the worst offer of all. Just beware of all thesales tricks when hunting for the ideal credit card.

In order for balance transfer to work in your favor, it'sessential that you not only develop a good strategy for yourdebt reduction but also follow it religiously, evaluate it fromtime to time and revise it if necessary. Once you have done thebalance transfer, ensure that you follow good credit card habitsand obtain a good credit rating.

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