Before you apply for that new balance transfer card, make sure you know the ins and outs of how balance transfers impact FICO scores so you can minimize potential disadvantages.

Taking out a balance transfer may lower your FICO score in the short-term. But it can also help boost your score over time. Here are the three ways in which taking out a balance transfer will impact your credit score.

1. Opening a new account will shorten the average length of your credit history.
Any time you open a new credit card, it will shorten the average length of your overall credit history.

“About 15 percent of your FICO score takes into account the length of your credit history,” says Kim McGrigg, Community and Media Relations Manager at Money Management International. “Part of that average is all your accounts, so when you open a new account, obviously it affects the average length of credit history. If you close the old credit account, it will impact scores even more.”

The good news is that the impact on credit scores from opening a new account is small and relatively short-lived, as long as you follow good credit management practices on the new account. The key is to keep that old account open and use the card occasionally so it’s still active.

2. Credit inquiries will ding your FICO score.
Each time you apply for credit, a lender will check your credit history to determine if you’re a good credit risk. This will show up on your credit report as a “hard inquiry,” which can lower your score.

According to FICO, one credit inquiry every once in a while will have minimal impact, shaving as little as four to eight points off credit scores, and the effect, again, is relatively short-lived. However, frequent credit inquiries affect FICO scores proportionately more and the impact lasts longer.

3. Your credit utilization rate will suffer or improve, depending on how you use your balance transfer.
Next to paying bills on time, your credit utilization rate, or debt-to-credit ratio, is one of the most important components of your FICO score. It makes up a full 30 percent of scores.

And when you take advantage of a balance transfer offer, it can hurt or help your credit utilization rate, depending on how you use the loan.

For example, if you open a 0 APR balance transfer credit card in order to fund a small home remodeling project or large purchase that you plan to pay off gradually, your debt-to-credit utilization will increase, lowering your score. The impact may be blunted by the fact that your overall credit limit will also increase. However, if the loan is large enough, your score will still be negatively impacted until you pay down the loan.

On the other hand, if you take out a balance transfer to pay off existing high-interest debt on another credit card, your overall utilization will decrease. The amount of debt that you have will stay the same, but with the new credit card, you will have a greater overall credit limit, so the total debt-to-credit utilization will improve.

In addition, your within-card utilization may also improve, which help boost your score. For example, let’s say you apply for a new balance transfer credit card and get a card with a $10,000 limit. If you transfer $5,400 from a card with a $6,000 credit limit to a card with a $10,000 limit, you will lower your overall credit utilization — and you will lower the within-card utilization as well (from 90 percent utilization to 50 percent).

Your credit score may be temporarily dinged by opening a new account. However, because credit utilization accounts for a full 30 percent of your score and opening new accounts only affects 10 percent of your score, the overall impact will still be positive.

However, with that said, be aware that having extra credit available could also turn out to be a credit score liability if you’re not careful, warns McGrigg, especially if you keep your old account open and active.

“It’s true that if you don’t close the old account, you might actually have a chance to improve scores,” says McGrigg. “However, that’s only true if you don’t charge the account right up again. For many people, having an account with a zero balance is too tempting, and they might end up twice as much in debt as before.”

It’s also important that you don’t get complacent, warn experts. Transferring your debt to a lower interest balance transfer card may be a step in the right direction — but there’s still more work to be done.

“So many people think that [by] moving to a better account with a better interest rate, their problems are solved,” warns credit repair expert and financial literacy advocate Harrine Freeman, “But they’re really just moving money. Don’t get fooled by tricks and gimmicks. You don’t know what will happen in another year; you could move, you could lose your job. It’s best to just pay your debt the old-fashioned way.”

“Most consumers don’t follow the terms well enough to save money on 0 APR credit cards,” says Mike Sullivan, Director of Education for Take Charge America. “Otherwise, card issuers wouldn’t be so generous with these offers. You have to be very disciplined to follow through and make the payments to pay off the 0 APR balance on time.”

Luckily, thanks to the consumer protections introduced by the Credit CARD Act of 2009, it’s easier than it used to be to take advantage of these deals without getting snagged by retroactive penalty rates and other expensive traps.

“There is a tremendous improvement in this area,” says David Jones, President of the Association of Independent Consumer Credit Counseling Agencies (AICCCA). “Consumers enjoy greater protections against retroactive interest rate hikes, part of the payment is applied to the balance with the highest interest rate and the disclosures are much clearer as well. All in all it’s a much better situation than it used to be.”

Card offers are getting better too, say experts. For example, if you have excellent credit, you may be eligible for promotional terms that run as long as 21 months and you could pay less in balance transfer fees as well — at least until the promotional period expires.

Here are also five more ways you can save with a 0 percent promotional credit card offer:

1. Consolidate high-interest credit card debt.
Transfer your high-interest credit card balances to a card with a 0 APR or low-interest balance transfer offer. Then use the money saved in interest to pay down your debt faster.

Tip: Make sure you repay the balance in full before the introductory offer ends in order to avoid paying higher interest rates on the remaining balance.

2. Give your budget a temporary cash infusion.
If you are faced with higher than usual expenditures or need a short-term cash infusion, the interest saved on a 0 APR balance transfer or a 0 APR offer on purchases can give your budget a temporary cash infusion to tide you over until your economic situation improves.

Tip: Don’t borrow money you don’t have. Calculate ahead of time how much you can realistically pay off before the promotional term expires and don’t charge more than that.

3. Charge large, planned purchases.
If you’re already planning to make a large purchase within the next year, charge the purchase to a card with a 0 percent APR and repay the balance before the promotional period expires. This will allow you to make the purchase earlier than planned and pay it down slowly without incurring interest.

Tip: Keep in mind that carrying large balances on a credit card could affect your credit score. Before taking out a balance transfer or charging a large amount, use a FICO score estimator to calculate the effect on your credit score, and then decide if it’s still worth proceeding.

4. Finance a home improvement project.
Bank credit cards that offer 0 APR on purchases can be a great way to help finance a home improvement project or another upgrade of your home.

They are also a much better choice than the store credit cards offered by big box home improvement stores, which can trap you into paying sky-high interest. For example, many store-branded credit cards with ‘good-as-cash’ 0 percent interest offers on the purchases made in the store come with an important catch: If the balance is not paid off in full before the end of the 0 APR term, full interest is applied retroactively to the entire balance back to the first day of purchase. And since most of these store credit cards also feature interest rates as high as 24.99 percent, you could find yourself paying 24.99 percent on that 0 APR purchase—all the way back to day one.

Tip: Pay careful attention to the terms of any credit card offer you receive.

5. Save on other loans.
This is trickier, so do the math carefully and only proceed if you’re disciplined enough to follow through on your plan.

Calculate how long it would take you to pay off the balance on, say, a high-interest car loan or home equity loan without the added interest and then calculate whether you can afford to pay that amount within the allotted time. If you find that you can afford to pay the loan completely within 12 to 21 months, take out that same amount on a credit card with a long-term 0 percent APR offer.

For example, if you owe $10,000 on a car loan, you could ideally take out a $10,000 0 APR balance transfer for 21 months and avoid paying interest on the car loan for almost two years.

This is an extremely risky strategy, however, and will only work if you’re sure you can pay off the credit card balance in full before the promotional offer expires. And don’t just count on transferring the remaining balance to another 0 APR card at the end of the promotional term, as this can easily backfire.

Tip: Give yourself a financial cushion when you’re calculating how much you can afford to repay each month before the promotional period expires. That way, you’re less vulnerable to having your budget thrown off by unexpected expenses.

(Updated 09-22-2011. Originally published 05-22-2009.)

Long-term 0 percent balance transfer offers can be a great way to get a cheap short-term loan. However, they can also cost you a great deal more than you save if you’re not careful.

Here’s how to avoid the traps and make the most of your next balance transfer deal.

Step No. 1: Consider the bigger picture.
Before taking out a balance transfer, consider the long-term financial implications. Balance transfers can be very helpful if you’re planning to make a large purchase, renovate a home or if you just need a short-term loan. However, they are not such a great idea if you’re simply looking for a cash infusion to make ends meet.

“Credit cards with balance transfers usually come with higher interest rates,” says Michael Rubin, author of “Beyond Paycheck to Paycheck: A Conversation About Income, Wealth, and the Steps in Between.” “If you have a significant balance when the 0 APR offer expires, you can easily end up paying more than you save.”

In addition, taking out a large balance transfer or applying for new credit can lower your FICO score. If you’re planning to take out a mortgage or other large loan in the future, you might want to defer balance transfers until later.

Step No. 2: Determine which deals you qualify for.
To get approved for the best balance transfer offers, you must have excellent credit. For example, if the advertised length of the promotional period is up to 15 months, you may still be offered a shorter interest-free period — sometimes as little as six months — if you have less than excellent credit.

If you don’t know what your credit score is, use a FICO score calculator to estimate your credit score or pay to get a copy at myFICO.com. If your credit score is below 720, you are unlikely to be eligible for the best balance transfer deals.

The fine details of the offer will be buried in the footnotes, so be sure to thoroughly read those details before you apply.

Step No. 3: Do the math.
Calculate the cost of the balance transfer before you pick an offer. Most credit cards charge a 3 to 5 percent transaction fee for balance transfers so be sure to factor this in.

A 0 percent APR balance transfer offer lasting 21 months may be worth the transaction fee because it will average out to a very low-cost loan. However, if the interest-free promotional period is only six months, the effective annual interest rate for a transfer with, say, a 5 percent balance transfer fee is 10 percent—a much less attractive offer.

Step No. 4: Check your budget.
The secret to making a balance transfer work for you is to pay off the balance in full by the end of the promotional period. But first, you’ll need to check ahead of time whether you can afford it.

“You don’t want to be in a game where you’re constantly opening and closing credit cards to carry the balance transfer forward,” says Rubin. “The aim is to pay the thing off. If you’re just moving the balance from one card to another, it’s a good indicator that you’re not attacking the main problem, which is the debt.”

To determine how large a balance transfer you can take out, calculate how much you can afford to pay the balance down by each month. (If you don’t already have a budget that breaks down your income and expenses, you will need to create one.)

Then, multiply the amount you can pay off each month by the length of the promotional period. For example, if you have a card with a 15-month promotional balance transfer period and you can afford to pay the balance down by $200 each month, you can ideally take out a balance transfer of $3,000, minus the amount of the balance transfer fee, and avoid paying any interest.

Step No. 5: Make it automatic.
Set up automatic monthly payments from your bank account in the amount you will be paying the balance down by each month. This way, you won’t have to worry about late or missed payments, and the balance will automatically be paid off in full at the end of the promotional period.

Step No. 6: Watch out for penalty fee traps.
For most balance transfer cards, small slip-ups like a late payment or a returned check will trigger penalty APRs up to 29.99 percent.

The good news is that the Credit CARD Act of 2009 prevents card issuers from applying those penalty rates to existing balances (such as your 0 percent APR promotional balance). The bad news is that card issuers can apply the penalty rate to future charges, such as new purchases or another balance transfer.

Worse, while some cards will reset the penalty APR to a lower rate if you pay the card on time for six billing cycles, other card issuers continue to charge the penalty APR indefinitely.

Read the terms of the offer carefully to determine what would trigger the penalty rate, and what the consequences are. If the terms aren’t clear, call a customer service representative to clarify.

Step No. 7: Leave the card in a drawer.
Yes, it is tempting to take advantage of the 0 percent APR on purchases, which many balance transfer cards offer as well. However, more likely than not, it will leave you holding the short end of the stick, paying high interest charges on debt you couldn’t afford to pay back at the end of the promotional period.

To avoid overcharging, never mix and match balance transfers and new purchases on a card. Once you make a 0 percent balance transfer, put the card away in a drawer until the balance transfer is paid off.

(Updated 09-09-2011. Originally published 05-22-2009.)

But before you sign up to transfer your balance to a new card, make sure you thoroughly read the terms and conditions and compare offers so that you know you are getting the best deal. Not only has it has it become harder to qualify for the best terms, say experts, there are also more hidden surprises for those who ignore the fine print.

“People must do their homework before applying for a balance transfer,” said Gail Cunningham, Vice President of Public Relations at the National Foundation for Credit Counseling in an email. “The offers with the best terms are usually reserved for those with good credit, so the first step is to make sure you qualify.”

To get the best balance transfer offer possible, follow these five steps before filling out an application.

1. Consider your credit score.
If you don’t already know your credit score, pull a copy of your credit report online and pay to get your score immediately. Knowing your credit score will help you determine whether you will qualify for a new balance transfer card and which credit limit to expect.

“Those with better FICO scores can anticipate getting higher credit lines, when applying for new credit cards,” says Robert Hammer, chairmain and CEO of RK Hammer Investment Bankers in Thousand Oaks, CA. “Perhaps not as high as the credit limits of the last decade, but nevertheless still far higher than the average.”

In addition, knowing your credit score will help you gauge the impact of the balance transfer on your score. Applying for a 0 percent APR credit card could affect it in two ways. First, each time you apply for credit, it gets recorded as a credit inquiry on credit reports, and too many credit inquiries will lower your score. Second, carrying high credit card balances in relation to overall credit can also damage your score. If you are at the borderline between good and excellent credit, a balance transfer could be enough to tip the balance.

Tip: If you’re planning to take out a major loan, such as a mortgage or a home refinance in the near future, that 0 percent APR deal could end up costing you a bundle if your credit score is impacted. Unless you have superior credit, this might not be the time to apply for a new credit card or make a balance transfer.

2. Determine how quickly you can pay back the balance transfer.
Before you start comparing balance transfer offers, it helps to know how quickly you will be able to pay off the loan. Balance transfer cards typically convert to high interest rates once the promotional period expires. (That’s how card issuers make their money.) As a result, a 0 percent APR offer that lasts for 12 months could end up costing more than a 2.99 APR offer that lasts for 18 months if it takes you more than a year to pay off the transfer amount.

To determine how long it will take you to pay off the balance transfer, divide the amount you plan to transfer by the monthly payments you are able to make. If necessary, make a budget of income and expenses, and based on that, determine how much you will pay off each month.

Tip: Treat the balance transfer as a loan. A 0 percent balance transfer offer sounds like free money, but don’t fool yourself. If you can’t pay off the balance transfer before the promotional period expires, you are really taking out a high-interest loan.

3. Compile a list of the best balance transfer offers.
Armed with the information above, it’s time to make a list of the balance transfer offers available to you. For an easy overview, use a credit card comparison guide that lists all the offers on one page.

If you have less than excellent credit, look at the cards available for people with good credit. (And if you have fair credit, know that you’ll have a harder time finding a 0 percent balance transfer offer that you qualify for).

Select the three to six best balance transfer offers that you find and write them down.

Tip: Go for diversity. Include different card issuers on your list, and also write down one or two offers that feature a higher promotional APR, but come with longer promotional periods.

4. Compare terms.
The devil is in the details. Comparing terms is essential, but this is a step many people skip.

“The savings from the low APR can be wiped out by excessive fees, so working the numbers in advance is critical,” noted Cunningham. “Before signing on the dotted line, make sure that you fully understand the fees associated with the transfer, and have put a pencil to them to determine if the transfer is truly beneficial to you.”

For each balance transfer offer selected in step three, make a note of the balance transfer fee in addition to the promotional rate and the length of the promotional period and whether there is a promotional rate on purchases as well. Also write down any special terms that could impact your decision.

Tip: Watch out for teaser terms (usually denoted by an asterisk) that reserve the advertised terms to only those with the very best credit. Read the footnotes carefully to avoid surprises.

5. Calculate the cost of the balance transfer.
Now it’s time to calculate the cost of each balance transfer offer over the life of the loan. Using your target balance transfer amount and the estimated time you’ll keep the loan, calculate for each card offer:

• The total balance transfer fee.
• The cumulative interest charges until the balance transfer is paid off (if you will be keeping the loan past the promotional period).

This may seem like a cumbersome exercise, but it can save you a bundle. Once you include the balance transfer fee, that ‘free’ 0 percent APR credit card offer may not seem like such a good deal after all. And if you plan to carry the loan for a long time, you may find that a low-interest balance transfer offer is the better way to go than a 0 percent APR offer.

Tip: Don’t make new charges to the card until the balance transfer is paid off. Otherwise, that short-term loan could easily turn into long-term high-interest credit card debt.

The least expensive way to carry a short-term balance on a credit card these days is to take out a card featuring 0 APR on purchases. Even if you can’t get a card with 0 APR on purchases in time for holiday shopping, charging everyday purchases to a 0 APR card in the New Year can free up money to pay down high-interest balances on other cards.

Of course, you can also take advantage of a 0 APR balance transfer offer, however, the 3 to 5 percent balance transfer fee these come with make balance transfer less attractive. Still, they can be a useful option if you’re looking for a short-term cash infusion.

Here are some of the best 0 APR card options for carrying a short-term balance.

For People with Excellent Credit
The Citi ThankYou Preferred Card currently offers 0 percent APR on purchases and balance transfers for 12 months. In addition, consumers applying for the card currently receive a 6,000 point bonus, redeemable for a $50 gift card if they spend $300 within 3 months of account opening. In addition, new cardholders get 2 ThankYou points for every dollar spent for the first 12 months, and 1 point thereafter. This means that the first year, the card pays 1 to 2 percent cash back on purchases, while allowing you to carry a balance forward at 0 percent APR. As low interest credit cards go, it doesn’t’ get much better than that.

After the first year, the Citi Preferred card comes with interest rates ranging from 12.99 to 20.99 APR (depending on credit rating), so budget ahead to pay off the balance before the 0 APR expires, or the tables will turn on you pretty quickly.

For people looking to carry a balance for a longer time, the PenFed Promise Visa card currently offers a 7.49 percent APR for the first 36 months. After three years, the long-term APR varies with the Prime rate, but it is currently at a low 9.99 percent APR. You must be a member of the Pentagon Federal Credit Union to apply. Family members of the U.S. military or Coast Guard qualify, as do people affiliated with the American Red Cross or the Department of Homeland Security. If none of these fit you, consider applying to become a civilian member of the National Military Family Association, which will also qualify you for a PenFed membership.

For People with Fair Credit
0 APR credit card offers and fair or average credit notoriously don’t go well together, but the Capital One No Hassle Cash Rewards Credit Card is currently breaking with tradition and offering 0 APR on purchases for about nine months for new cardholders. The card also lets cardholders earn a generous 2 percent unlimited cash back on gas and groceries and 1 percent cash back on all other purchases.

The No Hassle Cash Rewards card has one drawback: it comes with a $39 annual fee. Still considering the interest savings and the cash back earnings, this is a small price to pay for a 0 APR loan on purchases for nine months. After the 0 APR period expires, the card features interest ranging from 17.99 to 20.99 percent APR, so again, budget to pay off the balance in full before the promotional period comes to an end.

Firstly, while the time span of balance transfer offers has increased to previous lengths, balance transfer fees appear to be here to stay. Expect to pay a balance transfer fee of at least 3 percent per transaction. In addition, while seemingly soft and fuzzy, many of today’s balance transfer offers come with some pretty significant teeth: one late payment, for example, in some cases may be enough to trigger a penalty rate as high as 29.99 percent. Ouch.

Here is a guide to some of the more attractive current 0% APR offers.

Capital One Platinum Prestige Credit Card
For those drawn to more traditional 0% APR balance transfer offers, Capital One’s Platinum Prestige offers new credit card applicants a full 12 months of interest-free card use; with a 3% balance transfer fee. After the intro period runs out, consumers will pay a low 11.9% APR variable on any part of the balance not yet paid off. The card comes free of annual fees, and is available to people with excellent credit.

Cardholders taking out a 0% APR balance transfer with this Capital One credit card, however, should be careful to make their payments on time: a late payment might trigger a penalty APR as high as 29.99%.

Citi Platinum Select MasterCard
For those with less than perfect credit, Citi’s Platinum Select MasterCard offers a 0% balance transfer deal tailored to the applicant’s credit history. The zero-interest introductory period extends for a full 18 months. After the promotional period expires, cardholders will pay APRs ranging from an attractive 11.99% to 19.99%, again depending on credit history. In addition to applying to balance transfers, this 0% APR offer also applies to new purchases. The balance transfer fee weighs in at 3%. Again, cardholders making a 0% APR balance transfer with this card will want to get their checks in the mail on time in order to avoid that hair-graying 29.99% default rate.

The Citi card carries no annual fee, and offers secure, free online account management. Avoid making any further purchases while carrying a 0% APR balance on the card, however, as these will accrue interest at the regular purchase APR for the card, without a grace period.

PenFed VISA Platinum Cash Rewards Card
While not the card with the lowest balance transfer rate, the PenFed Visa Platinum Rewards card has two advantages: a long-term low promotional balance transfer rate for 24 months, as well as user-friendliness. Credit union credit cards are known to, generally speaking, offer better overall terms, and the PenFed Visa Rewards card is no exception.

In a market where cardholders can expect to pay 3-5% balance transfer fees without a cap, PenFed’s Visa offers a uniquely low 2.5% fee, capped at $100. Furthermore, the introductory APR, currently at 4.99%, lasts a full two years, one of the longest in the industry. For consumers looking for a long-term balance transfer deal, the 24-month promotional period makes for a better deal than several shorter, 0% APR intro offers, which would require repeated balance transfer fees. Furthermore, once the intro period expires, PenFed’s Visa Rewards sports a 13.99% regular APR. The card offers significant credit lines as well, depending on credit history and income.

The PenFed Visa card also offers attractive rewards, including a full 5% cash back on gas purchases, 2% back on supermarket purchases, and 1% on all other purchases, free from restrictions. Of course, you don’t want to use the card for purchases as long as you carry a 4.99% promotional balance on the card, as you’d be paying 13.99% interest on those purchases, without a grace period.

To be eligible for PenFed’s Visa Rewards card, applicants must be military or uniformed service members, U.S. government or American Red Cross employees, a family member/housemate of a current PenFed Member. If that doesn’t fit you, consider becoming a civilian member of the National Military Family Association.

Back in the heydays of easy credit, anyone with decent credit could apply for a credit card online, and moments later, have a balance transfer of $5,000-10,000 heading their way.

Today, unfortunately, the rules of balance transfers have changed. Good balance transfer offers are harder to come by, and even if you can get one, there are more reasons than ever to think twice before taking advantage of it. Here are the new rules of balance transfers and how to best navigate them.

1. Similar offers, few deals.

Anyone searching online for credit card deals will still find a great selection of balance transfer offers. But look beyond the packaging, and you’ll find that good deals are hard to come by. Not only are the 0% or low APR periods shorter, but the balance transfer fees are higher, ranging from 3 to 5%, and few transfer fees are capped.

What to do: Read the fine print carefully. A 3-month $10,000 balance transfer with a 0% APR and a 3% balance transfer fee would cost you $300, the equivalent of a 12% on an annualized basis. That’s not really a good deal.

2. Finding the best deal got a lot more complicated

Choosing a 0% APR deal for twelve months with no fee is a no-brainer. But these days balance transfers come in many shapes and forms, and it can be hard to determine which is the better deal. For example, which of the following is the best offer?

a) a 0% APR transfer for three months with an uncapped 3% balance transfer fee,
b) a 1.99% APR balance transfer for six months with a 5% balance transfer fee capped at $150
c) a 4.99% APR balance transfer for twelve months with a 5% balance transfer fee capped at $150.

The answer: it depends. It depends on how much of a balance transfer you plan to make and how long a period you need the balance transfer for.

What to do: When planning to make a balance transfer, look through the offers available to you and calculate the actual cost and the real annualized percentage rate of each deal to get a basis for comparing balance transfer offers.

3. Applying online for balance transfer cards has become risky

Check the fine print carefully: many card issuers advertise 0% interest rates for up to twelve months. In practice, this means that you may only be approved for a 0% APR for three months, and you still pay the same balance transfer fee of 3-5%.

Similarly, the purchase APR that will apply to the card after the balance transfer expires may be listed as as low as. Again, this means that only consumers with the very best credit will get the low APR. When the credit card arrives in the mail, you could end up with an APR that’s twice as high as that advertised.

What to do: When applying for a credit card online, don’t make any balance transfers while applying, instead wait until the card arrives in the mail. Then study the terms carefully to see if that balance transfer offer is still worth it.

4. Less leniency, tougher punishment

In the current economic climate, card issuers are far less forgiving than they used to be. One late payment, and you could see that 0% APR jump to the purchase APR on the card, which could run as high as 22.99%. Use more than 90% of the credit limit on the card for a balance transfer, and you could see the minimum payment due jump to 4% a month instead of the typical 2 to 2.5%.

What to do: Pretend that you’re walking on egg shells, because you are. Don’t make a single late payment, not even by an hour, and keep short-term balance transfers well below 80% of the card limit.

5. Balance transfers could create a domino effect

Credit scores are more important than ever. Carrying high balances on your credit cards could hurt your score, in turn affecting other parts of your finances. The amount of credit you use of the overall amount of credit you have available makes up 30% of your credit score. To avoid affecting your credit score, keep that ratio low, preferably at around 10% and definitely below 30%.

What to do: Calculate how much total credit you have available over all your credit cards and make sure that all outstanding credit card debt, including the balance transfer you’re planning to make, will make up less than 30% of your total credit available.

Back in the heyday of easy credit, some savvy consumers found a way to make money on credit cards—instead of the other way around. They played a nice little game of musical chairs: Take out a new credit card with a 0% APR balance transfer offer, invest the money in a high-interest savings account at a 3-5% return. Then, when the 0% APR expires, transfer the balance to a new credit card with a 0% APR and keep the money earning a nice return in the savings account. Rinse and repeat.

This little game of credit card arbitrage had many followers; whole website communities sprang up with tips for finding the best credit card deals, pitfalls to watch for, guidelines on how to minimize hits to one’s credit rating when applying for new credit cards, and so on. Some people made a nice little side income by putting in a couple of hours a month playing this game. Serious players accumulated upwards of $200,000 or more in credit card debt in order to invest it in a money market account.

In the current credit environment, playing musical chairs with credit card balance transfers, however, is no longer such a great idea. People who try to game the system may find that the days of great balance transfer deals are over and the terms of credit card transfers are too onerous to provide any advantage.

Even card holders who simply want a balance transfer to shift their credit card debt to cards with a lower interest rate or 0% APR offer may find that playing the balance transfer game has become a dangerous proposition.

Here are some of the changing rules of balance transfers and what to watch out for:

1. Changing terms. Great 0% APR offers used to be like low-hanging fruit—there for the picking, if you had even a half-way decent credit rating. Not so anymore. Credit card companies still try to attract new customers with alluring 0% balance transfer offers. But the fine print tells a different tale. The 0% APR offers are generally much shorter, from three to six months. And, while offers without a balance transfer fee used to be the rule, balance transfer fees can now run as high as a 5% uncapped fee. A three-month 0% APR offer with a “low” 3% balance transfer fee loses its charm when the default APR, sometimes as high as 29.99%, kicks in during the fourth month.

2. Offers are harder to come by. There are fewer good 0% APR offers and it’s harder to get approved; the best offers are reserved for people with a stellar credit score of 750 or higher. If you need to transfer a balance because you have high credit card debt, chances are you won’t qualify for the few good balance transfer deals that remain.

3. Credit companies are more trigger happy. A 0% APR offer may not mean 0% anymore. Miss one payment by even a day and suddenly you might see that 0% interest rate jump to a default rate of 29.99% or higher. At the same time, your minimum payment will double. If you’re already in a precarious financial situation, this alone could be enough to tip the apple cart.

4. Your credit score is likely to take a hit. Each time you apply for a credit card your credit score takes a hit. Just as bad, keeping a high balance on your credit cards can hurt your score further. If your credit score drops, it could affect the terms on your existing credit cards, causing card issuers to slash credit limits and/or raise interest rates.

In short, balance transfer offers can still be a great deal, but in today’s economic environment they should be approached with caution. Don’t play the credit card transfer game unless you have the money to pay off the balance at a moment’s notice. Otherwise, you could find yourself stuck with some very onerous terms because you are unable to transfer the balance to another card.

If you’re finding that you have to rely on balance transfers to manage your credit card debt, that’s a big red light that indicates it’s time to take to take a close look at your finances. Borrowing from Jack to pay Jill is a well-known money management technique. Unfortunately, it has landed many very smart people in trouble. If you’re struggling with credit card debt, the earlier you take steps to pay it off, the better you’ll be.

If you’re a good negotiator, you can often get the very best deals on credit card transfers via telephone. For most credit card accounts in good standing, customer service representatives can access a list of offers available to the cardholder. Don’t just take the first balance transfer offer presented. With a little persistence, you can often get better terms.

Here is how to get the best rates when making a credit card transfer by phone. This scenario presumes that you have multiple credit cards, you owe nothing on the card to which you want to transfer a balance, your credit is good and you have no late payments on your accounts.

First, check all online credit card transfer offers available to you, so you know what your best options are. If you have received credit card transfer offers in the mail, also make a note of what these offers are.

Next, call the customer service representative from the credit card(s) you are considering making a credit card transfer from. Ask if there are any balance transfer offers available on your account. Typically, the representative will be able to give you one or two options, which differ in terms of duration and APR.

The first offers presented are rarely the final word, so this is where a little negotiation can be helpful. For example, if the credit card transfer offer is for six months, explain that you were looking for something longer, and ask if there are any options for a longer low APR credit card transfer.

Likewise, if you’re offered a 6.99% APR transfer, ask if that’s really the lowest APR that the rep can offer. It doesn’t hurt to hint that you’re comparing this to another credit card transfer deal and are trying to see which card issuer offers the best deal.

Lastly, if there is a transfer fee, ask if it’s possible to cap the fee. If there is a cap, see if the entire transfer can be deposited into your bank account, so that you can write checks to pay off a variety of loan balances and just pay one transfer fee.

If you don’t like the answers you’re getting, it doesn’t hurt to ask to speak to a supervisor. Supervisors often have more flexibility in what terms they can offer. Refer to your long history with the card issuer (if indeed you have one) and hint that you’d prefer not to take your business elsewhere.

Quick Tip. If you’d like to maximize the amount of the credit card transfer available to you, ask if your card is eligible for an automatic credit limit increase. Most credit cards are eligible for a credit limit increase about once a year-as long as the account is in good standing. An automatic credit limit is based on your history with the company, and it doesn’t involve pulling your credit report.

If your card isn’t eligible for an automatic credit limit increase, the customer service rep will offer to apply for one for you. Don’t do it! Applying for a credit line increase involves pulling your credit report, which will lower your credit score. It is also noted in the credit card issuer’s records, and could be taken as a sign of financial distress. Not worth it.