Guide to Saving Money with Balance Transfer Credit Cards

Credit cards that offer 0% APR balance transfers provide consumers with a great opportunity to reduce annual interest expenses dramatically. For example, a person or business carrying a $5,000 balance on a credit card with an interest rate of 12% can save over $600 during the course of a single year.

Transferring balances from a high rate credit card to a 0% APR credit card is a simple process that can be accomplished online in as little as ten minutes. However, not all balance transfer offers are created equal. Below you can learn what to look for in the fine print when selecting a 0% balance transfer credit card.

Action Steps
The best contacts and resources to help you get it done

Keep your eye on balance transfer fees...

While a few credit cards offer no fee balance transfers, most credit card companies charge a 3% balance transfer fee. However, it is important to note the maximum fee associated with an offer. Some credit cards have a maximum fee of $75 per transaction; others have no maximum fees.

I recommend: If possible, look for a credit card that offers no fee balance transfers. If there are no such offers available, be sure to stick with an offer that has a $75 maximum fee on balance transfers. On a $5,000 balance transfer, a credit card with no fee limits will charge $150 to transfer a balance. That number can be cut in half by choosing a credit card with balance transfer fee limits.

Make sure the credit card you apply for does not offer tiered introductory periods...

When you review credit card offers, you will find that many advertise a 0% APR for up to 1 year. In the fine print, these credit cards will note that some applicants may be approved but only offered a 0% rate for three to six months.

I recommend: Before you submit your application to transfer a balance, be sure the card you are applying for will provide a 0% APR for a full year.

Know what your introductory rate covers...

If the credit card you apply for only offers a 0% APR on balance transfers, any purchases you make will be charged the standard interest rate. Furthermore, any payments you make will be credited toward your balance with the lowest interest rate. Thus, if you make new purchases, you will start paying interest on that balance immediately.

I recommend: I recommend: Apply for a credit card that offers a 0% APR on purchases and balance transfers for 1 full year if you intend to make new purchases with your credit card.

Compare offers before applying...

With hundreds of credit card offers available on the internet, it is important to search out the best deals available. A few minutes of research can easily translate into savings.

I recommend: Instead of visiting Amex, Discover, Visa and MasterCard, try searching a credit card comparison site such as Smart Balance Transfers, which focuses on this particular segment of the credit card market.

Tips & Tactics
Helpful advice for making the most of this Guide

• Read the fine print: Before submitting your application, make sure the duration of the offer is a full year.
• Watch the fees: If a no fee balance transfer offer can't be found, be sure to pick a credit card that has a stated maximum balance transfer fee.
• Don't disregard your credit card bills: It can take up to a month for a balance transfer to clear your previous account. Be sure to stay current on your bill.
• Pay your credit card on time: In the fine print of most credit cards you will find that failure to make your monthly payments will result in the termination of the 0% APR. Make paying your credit card on time a priority.