Discover the Simple Trick to Slash Your Debt in Half and Save Big Bucks with Balance Transfer Cards!
Do you find yourself drowning in credit card debt with no end in sight? If so, you’re not alone. According to a recent study, the average credit card debt among US households is over $16,000.
However, there is a simple trick that you can use to slash your debt in half and save big bucks: balance transfer cards.
Balance transfer cards allow you to move your high-interest debt from one or multiple credit cards to a new card with a lower interest rate. By doing so, you can significantly reduce the amount of interest you pay on your debt, which means you’ll be able to pay it off faster.
Here’s how it works:
Find a balance transfer card with a promotional 0% APR period. Many credit card companies offer balance transfer cards with promotional 0% APR periods, usually ranging from 12 to 18 months.
Transfer your high-interest debt to the new card. Once you’ve found a balance transfer card that offers a promotional 0% APR period, you can transfer your high-interest debt to the new card.
Pay off your debt during the promotional period. During the promotional 0% APR period, you won’t accrue any interest on your debt. This means that you can focus on paying off your debt without worrying about interest charges.
Save big bucks on interest charges. By paying off your debt during the promotional period, you’ll save big bucks on interest charges. For example, if you have $10,000 in credit card debt with an interest rate of 20%, and you transfer it to a balance transfer card with a promotional 0% APR period of 18 months, you’ll save over $1,600 in interest charges.
It’s important to note that many balance transfer cards come with balance transfer fees, which typically range from 3% to 5% of the balance transferred. However, even with balance transfer fees, you can still save big bucks on interest charges by taking advantage of a promotional 0% APR period.
To maximize your savings, it’s important to pay off your debt during the promotional period. If you’re unable to pay off your debt during the promotional period, you may end up paying more in interest charges than you would have if you had never transferred your debt to a balance transfer card.
In conclusion, balance transfer cards can be a powerful tool for slashing your debt in half and saving big bucks on interest charges. By taking advantage of a promotional 0% APR period, you can significantly reduce the amount of interest you pay on your debt and pay it off faster. So what are you waiting for? Start researching balance transfer cards and take control of your debt today!
But before you can realize the benefits of a balance transfer, you have to consider how much you might be paying in interest now. Let’s say you’re carrying $5,000 in revolving credit card debt at an 18% APR. If you used the card enough to maintain that balance despite your monthly payments, you would pay a total of $900 in interest your first year. Ouch. Even worse, let’s say you paid only $100 per month until the balance was gone. In that case, paying off your debt would take a cool 94 months – or almost eight years – and cost $4,311.18 in interest on top of your balance. That’s a lot.
5 steps to save money with a balance transfer
Figure out how much debt you owe
Compare balance transfer offers to find the best deal
Create a repayment plan that lets you pay down debt fast
Pay as much as you can toward your balance during your card’s 0% APR introductory period
Stay the course until you’re debt-free
A balance transfer in action
With the prospect of paying that much interest looming, it’s no wonder so many people transfer credit card balances to find greener pastures. Using the scenario outlined above, someone could save hundreds or even thousands of dollars by transferring their balance to a balance transfer card like the Citi Double Cash card. With the Double Cash card, you get 18 months to pay off your balance without paying any interest. However, it carries a balance transfer fee of either $5 or 3% of the amount of each transfer, whichever is greater, if the transfer is made within four months of account opening. Afterwards, it increases to 5%. Let’s say you transferred your $5,000 balance to your Double Cash card. You’d need to pay a fee of $250, but then you could pay down the balance over 18 months and have it accrue no interest. Paying a $250 fee might seem steep, but if that $5,000 was sitting on a card with a high APR, you’d save more money in the long run by avoiding those interest charges. Balance transfer cards help you save money by providing a temporary respite from the high-interest rates traditional credit cards sometimes charge. And if you want to benefit, all you need to do is apply and take steps to transfer your high-interest balances.
Other balance transfer offers to consider
The Citi Double Cash is a popular option because it features one of the longest intro 0% APR balance transfer offers around. It’s also a very rewarding option, as it earns an unlimited 2% cash back for every purchase (1% when you make the purchase, 1% when it’s paid off) for no annual fee. However, because it has a balance transfer fee, you’ll want to consider the size of the balance you’re looking to transfer. Another good option is the U.S. Bank Visa Platinum Card. It doesn’t offer any rewards, but it gives cardholders 20 months to transfer a balance and pay it down as it accrues no interest. After that, a variable APR of 14.49% to 24.49% applies. It carries a balance transfer fee of either 3% of the amount of each transfer or $5 minimum, whichever is greater There are balance transfer cards that don’t carry a balance transfer fee, but more often than not, their intro 0% APR offers aren’t as long as cards that ask for a fee, and the other features are typically less then stellar. There aren’t many great options to choose from, but if you still want to go that route, consider the First Tech Odyssey Rewards World Elite Mastercard. It offers a intro 0% APR for balance transfers for 12 months and no fee. Again, keep in mind that paying a one-time fee will usually cost cardholders less than paying a high APR over many months would.
Making a balance transfer work for you
If you’re carrying high-interest debt and struggling to find a way out from under it, a balance transfer credit card might give you the breathing room you’re looking for. Just remember that most balance transfer cards charge a balance transfer fee equal to 3%-5% of your balance for the privilege. Whatever option you choose, remember that this is your opportunity to pay down your debt once and for all. Don’t take the easy way out and continue making the lowest payments possible. Instead, figure out how many months you have that promotional 0% APR, and use that time to make headway against your debt without the burden of added interest. A balance transfer can help you become debt-free once and for all – if you do your part. [This article was first published on The Simple Dollar in 2020. It was updated in March 2022.]
