The offers arrive almost daily-urging you to dump your current credit card for one with a lower rate. Steve Rhode runs a nonprofit debt counseling service. He says that attractive low rates are simply marketing tools that can give consumers a false sense of security. "People get into trouble when they move their balances to an introductory card. The interest rate is really low with a minimum payment that's really low, so unless you spend a lot more than the asked for minimum payment, you're going to be making the same little progress."
Before you transfer that credit card balance, do some simple arithmetic first to make sure it makes 'dollars and sense'. Make sure you understand whether that attractive rate is an introductory one or permanent. Find out if it's fixed or variable. If the rate is variable, find out why and how much can it increase. Find out if you have to pay a transfer fee. Does the card also require an annual fee? Don't expect to find out up front the amount of credit you can transfer.
Tom Cohn with the Federal Trade Commission explains, "Consumer credit statutes don't require they disclose what your limit is going to be up front because that usually depends on your credit worthiness." That means you may not be able to transfer all of that big balance and you're then stuck paying two credit card bills each month. If that happens to you don't take it lying down. Cohn says "Frequently, they will raise your credit limit if you squawk." If you don't, you're free to cancel your card and take your money to another card, transfer to another one that will give you the limit you want.
When it comes to paying extra for credit card insurance protection plans, just say no. You're already protected by federal law against unauthorized purchases greater than $50 as long as you report them in a timely fashion.
For NewsChannel 11's Consumer Connection, I'm Sharon Maines.