The balance transfer game is the practice of transferring your credit card balances to new cards with low teaser rates in the hope of saving on interest charges. This game of cost-saving activity is often lost. Juggling balances between credit cards in search of lower rates may just leave you deeper in debt. Below are some of the reasons:

• Credit card companies have enough research to prove that eventually you’ll fail to pay off your balance or neglect to switch your balance to another credit card before the grace period is up.

• Interest rates on balance transfers are often temporary and they may not be guaranteed especially if your credit history is anything but spotless.

• Payments are typically applied to the lowest interest rate first such as on balance transfer amount first, leaving the new, higher interest rate charges buried underneath. For example, if you transfer $10,000 to your new card, and also use that card to buy $100 shoes, your payment will be used to payoff your balance transfer amount of $1000 first while the $100 is accumulating interest charges at the higher interest rate.

• Some credit card issuers charge fees for each balance you transfer to their card. Again, you’ll want to check the fine print on the offer.

• A late payment, even once, could instantly raise your interest rate. You may also be slapped with a nasty penalty fee.

• Repeatedly opening new credit lines could adversely impact your credit score. Also credit card companies will recognize a pattern of hopping around and credit card issuers simply won’t want to waste their time on someone with a proven track record of cutting and running.

With all of the above points it’s easy to see why the balance transfer game is often a losing proposition. Thinking that you can short-cut the process by playing a risky game like repeatedly using balance transfers is not the way to go, you’re merely trying to reduce the interest on the debt not the actual debt amount. The only way of getting out of debt is to reduce and eliminate the entire debt. If you are truly looking to get out of debt and establish better credit, get off to a good start by considering a debt reduction process.