0% interest balance transfer

Are you paying hundreds of dollars each month just to meet the minimum payment on your high interest credit cards? Are you paying 15, 18 and even 21 % on high interest cards and barely making a dent in the amount you owe? If so, you may want to consider a 0% interest balance transfer.

What is it?

Credit card companies are no different than other types of businesses: they want you as a customer and will, at times, offer a variety of promotions and specials to try to win you over. One such promotion is a 0% interest balance transfer.

The credit card companies realize you may be swimming in debt, still paying outrageous interest rates on a card you obtained many years ago—before you were established—and with a 0% interest balance transfer, they are trying to give you a chance to eliminate these charges. Here’s how it works:

Let’s say you have two credit cards. One has a balance of $5,000, with an interest rate of 17%, and the other carries a balance of $10,000 at a rate of 21 % interest. Paying separately each month to meet the minimum payment—the lowest payment accepted which is usually 1-2 % of the balance—is not only a pain, but using this method, it will take you over 20 years to completely pay these cards off. A 0% interest balance transfer will allow you to consolidate the total amount you owe on two cards–$15,000—onto one card with a 0% introductory rate. This 0% interest rate is typically offered for a set period of time—6 months, 1 year, 2 years—and can ultimately save you thousands of dollars in interest charges.

Things to Watch For

Although a 0 % interest balance transfer may sound like a great deal, there are a few factors to consider before taking advantage of the deal. Among them are:

• What’s the Rate after the Introductory Period? Many credit card companies will attempt to lure you in with an introductory 0% interest balance transfer, but what they don’t tell you sometimes is the interest you will be paying after this period concludes. Be sure to read the fine print carefully and ask questions. Some of these credit cards will carry interest rates as high as 22% after the introductory period ends and you’ll wind up paying thousands more in the long-term.
• Fees. Many credit card companies charge outrageous fees and processing costs to complete a balance transfer. Try to shy away from these companies; there is no reason why your balance transfer should not be free of cost.
• Who’s the Offer From? Make absolute certain that the company offering the deal is reputable and FDIC insured.

If you have thousands of dollars in credit card debt, spread out among several cards with varying interest rates, a 0% interest balance transfer may be just what you need to begin digging out from the mound of debt you’re in. Just make sure the deal is credible and will offer you a savings in both the long and short term.