Use a Balance Transfer Credit Card to Save Money as You Pay Off Debt

When you have high interest debt, it can slow your efforts to pay that debt down.

The higher the interest rate, the greater the percentage of your payment going toward interest — instead of reducing your principal.

When high interest debt is involved, it can take years, and hundreds of extra dollars, to pay off your debt.  Even if you are paying more than the minimum.

Instead of sticking with the same high interest loan throughout the term, consider using a balance transfer to get a temporarily lower rate.

What is a Balance Transfer?

A balance transfer works when you are approved for a certain amount of debt for a new loan.  You move your debt to a new lender, and that lender, in return, offers you a lower interest rate.  Sometimes this is a fixed low rate, but more often, especially in the case of credit card balance transfers, you will receive a low rate for a limited period of time.

Credit card balance transfers can be a good way to move some of your high interest debt to a lower interest card in order to take advantage of low rates.

You open a new credit card and move your balance over.  Many credit card balance offers provide you with 0% interest for six months to 18 months (sometimes even longer), depending on your credit rating and other factors.

With a 0% credit card interest rate, everything you pay goes toward the principal.  Even if you can get a 2.99% balance transfer for 18 months, that’s usually much better than paying 19.99% interest on your current card.  More of your payment will go toward reducing the principal, and your debt will be reduced much faster.

Best Balance Transfer Strategy

balance transfer credit card can fix debt

A balance transfer credit card can help you fix the amount of debt you have.

If you decide that a balance transfer is for you, it’s important to have a plan to pay off your debt as quickly as you can.  This is because most balance transfer rates are introductory.  Once the intro period is over you have to go back to paying the regular rate.

The best strategy, if you can, is to arrange matters so that you pay enough each month to discharge your debt within the intro period.  That way you don’t pay any more interest on the debt at all.

For many, though, six to nine months isn’t enough time to pay off all of their debt.  In such cases, you might look for a balance transfer card with a 2.99% or 3.99% rate for a longer period of time.  It’s still better than having to pay more than 15.99% APR on most of your debt after the six month intro rate ends.

Sometimes you can transfer the remaining balance to another card with a low rate to keep you paying more of your principal.

And remember, if you are adding new purchases and/or just paying the minimum on the balance transfer card then you are setting yourself up for disaster.  A balance transfer card is a time-out on your interest and it’s your time to truly tackle that debt!

What I’ve Done

There was a period where I racked up a tidy little sum in credit card debt.  I’m not proud of it and I take full responsibility for it.

I was doing what I could to pay off my cards (yes, I had debt on a number of cards).  I was getting better but with interest I was pretty much running to standstill with my debt.  I was able to keep it from growing but that was about it.

Then I found a balance transfer credit card offer.

I applied, was accepted, and promptly transferred over a credit card balance.  Now when I made a payment I was paying it all to principal (I kept paying the amount I was paying on the old card wich was more than the minimum).  I would end up needing another card because my intro rate on the first one ran out BUT I was well on my way to crushing my credit card debt for good.

Getting those balance transfer credit cards were a big part in my getting out of debt.


Even if you can’t maneuver yourself into a situation that allows you to pay off your credit card balance within the introductory period, it’s still possible to gain some advantage from a balance transfer.

Pay as much as you can toward the debt.  When the interest rate goes up again, you will have a lower principal to pay interest on, and that can help you save in the long run.

In many cases, as long as the balance transfer fee isn’t prohibitive (try to find a card without a balance transfer fee), it’s possible to better your situation with the help of a well-planned balance transfer.



Published or updated July 25, 2012.

Speak Your Mind


This site uses Akismet to reduce spam. Learn how your comment data is processed.