Balance Transfers

Transferring a high credit card balance to a card with a lower rate is a great way to consolidate debt, reduce monthly expenses, and free up cash. But finding a good offer takes some close reading. Many cards charge balance transfer fees, typically around 2-3 percent of the balance. Also, some apply the low APR only to the balance -- not to new purchases. "Then what happens is if you use the card for purchases at a higher rate, your money is used to satisfy the lower rate payment first," warns Linda Sherry, spokesperson for Consumer Action.

Advice: Look for a card that offers the same interest rate for balance transfers and new purchases. Ideally you won't make new purchases. "If your goal is to get out of debt, take advantage of the low-interest introductory offer and then work like crazy to pay everything possible without using the credit card for additional purchases," says Johnson. She also urges consumers to close the old account, a move that will help raise your credit rating. One more caution: Don't transfer disputed charges; you'll lose the right to deny payment to the seller.