While credit card companies don’t historically offer 0% balance transfer offers that last much longer than 12 months, occasionally it is possible to get a 0% APR on balance transfers for 24 months. When these deals are available, as is currently the case with the Citi Platinum Select Card, anyone with credit card debt can potentially save hundreds, if not thousands of dollars by taking advantage of these offers.

How Much Can Be Saved with a 24 Month Balance Transfer by Someone with a 15% Interest Rate

Since average credit card interest rates are hoovering around 15%, I thought this was a good rate to test. I assumed total credit card debt of $5,000 with a monthly payment of $150. A person with this debt and interest rate would spend $1,168 on interest over the course of 24 months. During these two years, total credit card debt would be reduced from $5,000 to $2,568. This is a 47% reduction, which isn’t bad. But that $1,168 in interest expenses isn’t good.

If that $5,000 of  debt is transferred to a credit card with a 0% APR for 24 months, interest expenses drop to $0. The only expense is a one time balance transfer fee of 3%, or $150. Taking this fee into consideration, total credit card debt drops from $5,000 to $1,592 after 24 months. This is a 68% reduction of credit card debt in the same time period and saves a person who uses a balance transfer $976. That is as close to a free lunch as one can ever expect to find.

Determining How Much You Can Save with a 24 Month Balance Transfer

The easiest way to determine how much you can save with a 0% balance transfer for 24 months is to use a balance transfer calculator, such as the one available at Smart Balance Transfers. To calculate your savings, you simply input your debt and interest rates from up to 3 cards, set your monthly payment and press calculate. You can also use loan amortization schedules on excel as I do, but this can get complicated if you have a number of credit cards with different interest rates.

If you don’t feel like doing either of these things, here are three examples of how much can saved for every thousand dollars transferred assuming a 3% monthly payment at different rates:

Example 1: For every $1,000 transferred from a card with a 12% interest rate, savings total $150. On $3,000 of debt, savings total $450. On $8,000 of debt, savings total $1200.

Example 2: For every $1,000 transferred from a card with a 17% interest rate, savings total $241. On a $3,000 balance transfer, savings total $723. On an $8000 balance transfer, savings total $1928.

Example 3: For every $1000 transferred from a card with a 21% interest rate, savings total $321. With a $3,000 balance transfer, savings total $963. And for an $8000 transfer, savings reach a whopping $2568.

Final Thoughts

As the numbers indicate, transferring credit card balances to a new card that offers a 0% APR on balance transfers for 24 months can provide substantial savings. However, the key to getting the most out of balance transfer offers is to stick to a repayment plan that gets your credit card debt as close to zero as possible before the introductory rate expires.  Don’t use 0% rates to kick your credit card problems down the road. Be proactive and take advantage of this opportunity to make credit card debt a thing of the past.

To learn more about balance transfers, please visit the main section of Smart Balance Transfers.