How to Save Money with 0% Balance Transfers

Are you struggling to make your monthly credit card payments? Maybe you had an emergency last year, and you're still paying for it thanks to hefty interest rates. Or you could be preparing to buy a house; paying off some of your credit card debt would raise your credit score and make you more appealing to mortgage lenders. Whatever your reason, one thing is certain: 0% balance transfers can help you pay off your debt fast.

What Are 0% Balance Transfers?

Some credit cards advertise 0% interest on balance transfers. That is, if you take your balance from an existing card and transfer it to the 0% card, you won't have to pay interest on that balance for the duration of the 0% APR period.

The drawback is that the 0% APR period won't last forever. 12 months is fairly typical, but some cards have 0% phases that last from 3 to 18 months. When you transfer a balance to one of these cards, you must pay it off within the designated time period. Otherwise, your balance will be subject to interest again . sometimes at quite a high rate.

How to Lower Your Interest with Credit Card Balance Transfers

Let's assume you have $5,000 of debt on a credit card with 12% interest. You'll end up paying hundreds of dollars more than the value of your debt. If you make only the minimum monthly payment, you'll spend even more -- and it will take years to repay the debt in full.

But if you transferred that $5,000 to a low or 0% interest balance transfer card, you would pay only the principal amount for the duration of the 0% APR. That's a vast improvement that will save you money and get you out of debt quickly.

How to Maximize the Benefits of 0% Balance Transfers

To get the most benefit from 0% balance transfer credit cards, take the balance from your card with the highest APR and transfer it to a card with low or no interest. Choose balance transfer cards with reasonable terms. Try to minimize the balance transfer fee. Also, if you plan to carry a monthly balance, look for cards with low interest rates. Even if you don't intend to, you might have some debt left over once the 0% period has passed. If that happens, you don't want to be stuck with a sky-high interest rate.

When used wisely, 0% balance transfer cards can help you climb out of debt. Choose one with generous terms and use it to knock out your balance fast.

Click here for a detailed list of balance transfer cards.