The Benefits of 0% APR Balance Transfer Credit Cards

I.  Introduction

Do you know how much money you waste on interest every year? For the average consumer, this figure is somewhere around $140 for every $1000 of credit card debt. This means that someone with $3,000 in debt spends over $400 a year on interest. That’s enough money to have a few nice dinners, buy some new clothes, or fly somewhere nice for a vacation. For someone with $10,000 in credit card debt, the $1,400 saved could be spent on rent, a mortgage payment, a vacation…or a nice widescreen TV. Interest adds up quickly. Fortunately, it’s an expense you can avoid.

II. Example

A good 0% balance transfer credit card will charge no interest on balance transfers and purchases for 1 year. Most of these credit cards will charge a balance transfer fee of 3% up to a maximum of $75. Factoring in these transfer fees, a $2000 balance transfer would save you $220. Plus, if you use your card for $1500 in new purchases, the 0% rate on purchases will save you an additional $200 in interest, bringing your total one year savings to over $400.

If you’re transferring a larger balance, the savings can be quite substantial. Someone transferring $7,000 to a 0% credit card can save close to $1000 on interest in just one year.

III. Final Remarks

0% balance transfers provide an excellent way to defer paying credit card interest. The money you can save with even a small balance transfer can be significant. Yet however tempting it may be to spend the extra money for luxuries, perhaps the best way to maximize the savings you get from a 0% credit card is to use the money you save to pay down your credit card balances.

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