There are some great savings to be had with a 0% balance transfer deal, especially if you’re already paying huge interest charges on your old credit cards or store cards.
The object behind the 0% balance transfer credit cards is to offer you an opportunity to save money on interest costs while you focus on repaying your credit card debt more quickly. As your money won’t be going towards paying those high costs, it goes directly towards repaying your balance instead.
This can be an ideal way to really repay your debts quickly and reduce your costs at the same time.
If you’ve had trouble getting ahead with your credit card balances, this could be an ideal option for you. You should find that it’s much easier to make a dent in those outstanding debts when the interest isn’t being added onto it each month, making it harder to reduce the balances.
Keep in mind that the vast majority of 0% balance transfer offers extend usually for around 6 months. This means the lovely no interest period you can enjoy will end after the first six months. When this happens the rate will then change to become the higher purchase interest rate that is normal for that particular card.
You’ll also need to remember not to use your 0% balance transfer card to pay for any purchases, or to make cash withdrawals, or you could find that your interest bill ends up a bit higher than you think.
This is because the money you put into your account will always be used to pay off the amount owing that has the lowest interest rate. In this case, that’s the 0% balance transfer amount.
So if you bought something that cost $200 and you immediately put $200 into your account to cover that purchase, it won’t matter. That money will be put towards paying down your balance transfer amount.
Unfortunately, it also means that the $200 you spent on that purchase will remain sitting there, attracting high interest, until after you’ve completely repaid the amount you transferred over from your old credit card.
If you’re tempted to apply for a 0% transfer balance offer, you will be able to save plenty of money on those exorbitant interest charges. But remember to only ever use your card for the purpose of reducing your debt and saving money. Don’t give in and use it for purchases or cash transactions, or you’ll end up not benefiting as much as you first thought.
