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Dear Liz: I've incurred roughly $56,000 in student loan debt. The federal loans were consolidated at a rate of 4.75% a few years ago. The rest are private loans and have higher, variable interest rates. I've heard that some people have been able to transfer their student loan debt to a very-low-interest credit card (say about 1% or 2%) and paid it off ahead of schedule this way. Is this a smart move for the private loans? If so, how would I find such an offer? (Perhaps through a credit union?)

Answer: Using low-rate credit cards to pay off other debt may lower your finance costs -- or cost you a lot more in the long run.

That's because the low rates offered by credit cards are typically temporary. These "teaser" rates often expire after six to 12 months, which means you'll have to search for another offer with no guarantee you'll find another great rate.

Some cards offer "fixed" rates, but that's a misnomer. There's no such thing as a truly fixed rate in an industry that can change any of your rates or terms with just 15 days' notice. Besides, most "fixed-rate" cards charge more in interest than you're paying now.

Also, transferring a balance typically requires paying a 3% or 4% balance transfer fee that may wipe out any savings. These fees once were capped at $50 to $75, but today many issuers have eliminated the caps, making a big transfer an expensive proposition.

Finally, you can't get a deferral or forbearance from a credit card company, but those options typically are available from student lenders if you run into economic hard times.

If you still want to try the credit card route, educate yourself. Get your FICO scores at myfico.com, because the best offers go to those with good credit (usually FICOs of 720 or above). Check your local credit union, because credit unions often offer good rates. Also investigate websites such as CardRatings.com and Bankrate.com that list a variety of credit card offers.

Make sure you read all the fine print and understand what fees will be charged as well as when your interest rate can change. Set up automatic payments so that you're never late -- even a single delayed payment can cause your interest rate to skyrocket.

Liz Pulliam Weston is the author of the recent book "Easy Money: How to Simplify Your Finances and Get What You Want Out of Life." Questions for possible inclusion in her column may be sent to 3940 Laurel Canyon Blvd., No. 238, Studio City, CA 91604, or via the "Contact Liz" form at www.asklizweston .com. Distributed by No More Red Inc.

Source : http://www.latimes.com/