NEW YORK (sbup) — The jury is still out on the full impact of the Credit CARD Act, but one of its more positive attributes is that card issuers now have to be more transparent about balance transfer offers. Case in point: Citi’s new Platinum Select Card, where a 0% interest rate for 21 months really means 21 months.

Cardholders get the 0% rate on balance transfers and purchases for the first 21 months they have the card. After that, the variable rate rises to between 11.99% and 20.99%, depending on the consumer’s credit history.

Technically, it’s not accurate to say the Citi card is “free”. There is a transfer fee of 3% of the transferred amount (or $5, whichever is greater), and while it can be spread out over the 21 months, you’ll be paying something for the card. Plus, you’ll need a good credit score to get the deal and the offer is only available to first-time Citi cardholders.

Still, when Citi says 21 months, the bank means 21 months. Credit card companies can no longer fudge the numbers, and in the post-reform era, they have to spell out the exact timeframe of any balance transfer time period.

Before you jump in head first, though, know that credit card balance transfers carry some caveats. You’ll want to think hard about the following issues before you green-light any balance transfer deal:

• Balance transfer fees can accumulate. The Citi deal caps the rate at 3%, but the issuer doesn’t mention any ceiling on the fee. Some card companies cap balance transfer fees at around $100 or $150, while some card companies don’t have any caps. Make sure to ask what the fee will be before you sign up.
• Your credit score will take a hit. Citi, like any creditor, will want to take a look at your financial health before granting you any credit. If you get into a cycle of repeated credit card balance transfers, then your credit score could take a blow, since every new card counts as a "hard inquiry" on your report.
• A balance transfer doesn’t cut the balance. Sure, 0% interest sounds great, but it only means that your old card debt doesn't grow. The actual balance doesn’t go anywhere, and if you keep adding balance transfer fees to that debt, you may just be treading water (at best) on your credit card debt. Ideally, the best plan for any credit card debt isn’t to kick the can down the road, but to pay it off once and for all whenever you have extra funds.

All said and done, the Citi offer is a strong one – if you keep it to a one-time deal and use that 21 months (the faster the better) to pay down your debt without accruing interest.

But if you keep living on plastic, any benefit derived from a low-interest rate credit card balance transfer will go right out the window.

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