0% balance transfer credit cards offer consumers a rare opportunity to save money with credit cards. Interest on credit card debt piles up daily and even people who only owe $2,000 on a credit card with a relatively low 14% interest rate will likely spend over $200 a year in interest. Fortunately, saving that $200 is easy with balance transfers.
With a 0% balance transfer, you pay a small transaction fee of three to five percent in exchange for a year or more of life without credit card interest. During this time, every dollar you pay your credit card company goes towards reducing your debt instead of simply keeping up with monthly interest charges. There are even 0% APR credit cards among the best college student credit cards available if you are a struggling student.
Taking advantage of a 0% APR balance transfer is easy. Simply find a credit card from a company you currently do not have a card with and apply online. However, once you transfer your balances, there are three easy mistakes you need to avoid in order to reap the most benefits.
The first and most important thing that you must do is pay your new credit card on time. If you fail to do so, your credit card company can increase your interest rate from 0% to 12% or more – and this certainly won’t help you to clear debt and be on your way to a debt-free existence. Thus, while it is always important to pay your credit card bills on time, it is especially important to pay your balance transfer credit card bill on time.
Failing to pay off your old credit card in full is one of the worst credit card mistakes. Although you will probably transfer the entire balance to your new card, there is a good chance that your next statement will have some new interest expenses. Keep an eye out for this and make sure your old credit card is paid in full to avoid late fees.
Lastly, unless your old credit card comes with an annual fee, you should keep it open. If you close the account, it could have a negative impact on your credit score. Thus, unless it costs you money, you and your credit score will benefit from keeping your old account active.
As long as you pay your bill on time, pay off any extra interest on your old credit card, and keep your old card open, getting the most out of a balance transfer credit card is easy. Not only will you end up saving hundreds on interest, but you’ll also be on the road to becoming debt free.