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If you’re carrying heavy credit card account debt, playing the balance transfer game can save you serious cash. The trick is to take advantage of “teaser” rates and grace periods by continually shifting balances from higher- to lower-rate cards. If you have the energy and discipline, this strategy can serve as a quick and reliable source of low-cost loans for your business. But be careful: it can also end up a time-consuming distraction.

Take advantage of teaser rates. Teaser rates are introductory annual percentage rates that last for a limited time — usually three to six months. These rates are often quite low. By transferring current balances to these cards from cards that charge 15 percent or more, you can potentially save a lot of money.

Be aware, however, that banks usually treat balance transfers as cash advances. While policies vary from card to card, cash advances often carry charges that may be calculated as a percentage of the entire amount transferred. Cash advances also typically accrue daily interest until paid, without a grace period. That could cost you some real cash if the balance that you are transferring is large. However, charges are sometimes waived for introductory or promotional balance transfers.

You should also look out for flat “balance transfer” fees on top of any transaction percentage charge. The point is: know exactly what it will cost you to make a balance transfer. Read the fine print or ask company representatives about any charges before going forward.

Work the grace periods. To take advantage of grace periods, you need to pay or transfer balances in full by the payment due date. Typical grace periods run 25 days. Interest accrues on any outstanding balance after that point. Interest on purchases within the current billing cycle isn’t charged until the next cycle. And no interest is charged on balances paid during the current cycle.

Many charge cards do not offer grace periods. They allow banks to start charging interest on the day purchases are made or the day they are recorded. Avoid these cards.

Don’t just pay the minimum. Regardless of how many transfers you make, you’ll have to make payments on your balance at some point. But don’t just pay the minimum.

Minimum monthly payments are the smallest amounts payable to maintain good cardholder standing. Banks love minimum payments because they rarely address the balance principal — they simply chip away at accrued interest. In this way your outstanding balance continues to generate income for the credit-card lender. Minimum payments can extend the practical life of credit card account loans by months and even years, depending on the size of the debt.

Don’t use credit cards as a long-term strategy. While charge card accounts and balance transfers may be a cheap and easy approach to financing in the short run, they are not a good long-term strategy. Explore all your other options before embarking on a charge card financing scheme. Beyond the potential financial pitfalls, the energy and time involved in dealing with credit card companies to stay one step ahead of rising annual percentage rates may not be worth the effort.

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Credit card reform takes result

The final batch of regulations in final year’s federal credit-card overhaul took effect this calendar week. As the reforms take hold, some in the industry warn about damaging consequences while supporters annunciate protections in the law.

The novel credit card law includes these consumer protections :.

* Limits all interest rate steps up during the first year.
* Curbs rate of interest increases on being balances.
* Increases notice for rate increment on next purchases.
* Preserves the ability to pay off on the previous terms.
* Requires just application of defrayals.
* Puts up sensible due dates and time to pay.
* Protects young consumers.
* Cuts back issue fees on fee harvester cards.
* Asks enhanced disclosures.
* Places limits on fees and penalty interest.
* Commands banking companies to brush up rate increase every six calendar months.
* Establishes gift card securities.

“College students will no more get a card simply because they’re suspiring, which was the old test,” said Ed Mierzwinski, a consumer-protection expert with the U.S. Public Interest Research Group in Washington, DC

Additionally, the directions banks solicit on college campuses has been curtailed ; recruiters can’t give away food in exchange for credit-card applications, for example. And merchandising agreements between credit-card parties and colleges must be exposed to the public, a reform Mierzwinski said stems from the University of Iowa’s and University of Northern Iowa’s move to refuse state officials accession to credit-card contracts a few years ago.

Pols have touted the CARD Act as hugely good to consumers. Iowa’s Congressional commission irresistibly supported the legislation last year, with U.S. Rep. Steve King, R-Iowa, as the lone dissenter. In a release this calendar week, President Obama told : “This law will also make the terms of credit cards more understandable and puts a stop to hidden over-the-limit fees and other practices designed to trap consumers.” .

Still, lenders’ ability to levy high fees and rates on speculative accounts has mostly been cut back, a move large depository financial institutions say could hurt consumers.

” People with good credit may have to pay more in order to enjoy the convenience and flexibility of credit. And if your credit history is poor, you may find it much harder to get credit,” Bank of America officials said in a statement.

But at least one local institution hasn’t seen those striking affects.

“A lot of it is going after fees that large banks were bearing down, and since we weren’t truly doing any of those things, it doesn’t have a fundamental impact on our income,” said Jim Kelly, the senior vice president for marketing at the UI Community Credit Union.

And despite steps in the law involving most consumers under age 21 to have a cosigner, Kelly said approvals for the credit union’s student-focused card — which carries a relatively low fixed-rate and a low credit line — are up 60 percent in the past year.

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