If you want to reduce credit card debt without paying a fortune in interest, 0% balance transfer credit cards can be an extremely helpful tool. With a 0% balance transfer, you pay a small transaction fee and no interest for the length of the 0% interest period. With current balance transfer offers lasting up to 18 months, this can translate into hundreds of dollars in savings and reduce the time it takes to get out of credit card debt by years.
Here’s an example using the Citi® Platinum Select® Card which currently offers a 0% APR on balance transfers for 18 months and charges a 4% balance transfer fee. A person with $5,000 in credit card debt will pay a $200 balance transfer fee and no interest for 18 months. Assuming a $100 monthly payment, at the end of the 0% interest period, that person’s credit card debt will be $3,400. This amounts to a 32% reduction in credit card debt in a year and a half.
If the same person didn’t do a 0% balance transfer and continued racking up interest at a 16% rate while paying $100 a month, their credit card debt would be slightly more than $4,200 after 18 months. That’s an extra $800 of credit card debt that could have been easily avoided by taking advantage of a 0% balance transfer. Plus, by not doing a balance transfer, credit card debt is only reduced by 16%-half the 32% reduction that can be achieved with a 0% balance transfer.
Using balance transfers to get out of credit card debt is not difficult. Generally, it requires good credit to get approved for a new card. Individuals with poor credit will likely have difficulty getting approved and thus balance transfers may not prove helpful for those who fall into this category. However, anyone with good credit who carries credit card debt should take a close look at current balance transfer offers. Finding the right 0% interest deal could help you get out of debt faster than you thought possible while saving you hundreds of dollars in interest expenses.
For more information, please see the balance transfer credit card section of Smart Balance Transfers.
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