Don't let the "zero percent APR" fool you into thinking that everything is great about this card.
It isn't.
If not used properly, a zero percent balance transfer card can create more debt for you in the end than it can eliminate.
Even with good/excellent credit, this card may not make financial sense for you unless you are willing to rein in your spending for at least one year and have a serious plan to eliminate or pay down your debt.
Here are a few tips to help you take advantage of this offer.
Set a measurable goal.
The only reason for you to apply for this card should be to pay down or eliminate your credit card debt within a specific period, usually 12 months at most.
So, you need to know exactly how much you want to "knock off" your balance by the end of the introductory period and whether the monthly payment will fit in your budget.
Find a number that is comfortable for you, draw up a plan and stick to it for the entire period.
Consider other card features.
Don't focus on the introductory rate for balance transfer to the exclusion of other important features.
Choose a card with zero interest on both balance transfer and purchases, no annual fee, cash-back incentive, longer grace period, fraud liability coverage, and low cash advance APR, just to name a few.
Also, consider a card with low or no transfer fees.
Depending on the balance on your account, transfer fees could add up to a substantial amount especially if you can't transfer your entire balance at once.
Capitalize on the "no interest" feature.
This is where most consumers get it wrong.
Don't resort to making a minimum payment on your new account; this is a no-no when it comes to credit card balance transfers.
Why? At the end of the introductory period, your interest rate will jump considerably, which may leave you in a worse financial situation than ever.
If you are serious about paying down your debt, what you should do is pay the interest you should have paid on your old account plus a minimum amount (or higher) on the new account.
This is the #1 benefit of a zero balance transfer card: An opportunity to use the money you should have paid as interest to pay down or eliminate your debt.
Every other benefit associated with this card is an extra.
Make your monthly payment on time.
Late payment even for a single month can result in a substantial hike in your interest rate.
You may also be hit with a penalty fee.
To protect yourself from possible rate hike resulting from late payment, consider setting up an automatic bill payment.
This will help you keep the introductory rate for the stated period agreed to in your card agreement.
Have a plan "B.
" Don't lose sight of when the introductory period will end.
If you are not able to achieve your goal before it ends, arrange to balance transfer to a new account.
This way, you can avoid getting hit with regular APR.
There is nothing wrong with having to transfer your balance two or three times if it helps you eliminate your debt.
However, you should know when to "fold your cards.
" Credit card companies may not be too happy if you make a career out of transferring your card balances; it could hurt your credit.
Rather than hurt your credit with a zero interest balance transfer card, use it to your full advantage as a debt-reduction tool.
Getting the most out of it requires you to take some serious steps- set a measurable goal, consider other useful features when choosing your card, pay more than the minimum amount each month and on time, and be willing to balance transfer more than once if necessary.
Getting out of debt is no laughing matter; it is a serious and difficult task.
The good news, however, is that the belt-tightening involved pales in comparison to the benefits of being debt-free.
It isn't.
If not used properly, a zero percent balance transfer card can create more debt for you in the end than it can eliminate.
Even with good/excellent credit, this card may not make financial sense for you unless you are willing to rein in your spending for at least one year and have a serious plan to eliminate or pay down your debt.
Here are a few tips to help you take advantage of this offer.
Set a measurable goal.
The only reason for you to apply for this card should be to pay down or eliminate your credit card debt within a specific period, usually 12 months at most.
So, you need to know exactly how much you want to "knock off" your balance by the end of the introductory period and whether the monthly payment will fit in your budget.
Find a number that is comfortable for you, draw up a plan and stick to it for the entire period.
Consider other card features.
Don't focus on the introductory rate for balance transfer to the exclusion of other important features.
Choose a card with zero interest on both balance transfer and purchases, no annual fee, cash-back incentive, longer grace period, fraud liability coverage, and low cash advance APR, just to name a few.
Also, consider a card with low or no transfer fees.
Depending on the balance on your account, transfer fees could add up to a substantial amount especially if you can't transfer your entire balance at once.
Capitalize on the "no interest" feature.
This is where most consumers get it wrong.
Don't resort to making a minimum payment on your new account; this is a no-no when it comes to credit card balance transfers.
Why? At the end of the introductory period, your interest rate will jump considerably, which may leave you in a worse financial situation than ever.
If you are serious about paying down your debt, what you should do is pay the interest you should have paid on your old account plus a minimum amount (or higher) on the new account.
This is the #1 benefit of a zero balance transfer card: An opportunity to use the money you should have paid as interest to pay down or eliminate your debt.
Every other benefit associated with this card is an extra.
Make your monthly payment on time.
Late payment even for a single month can result in a substantial hike in your interest rate.
You may also be hit with a penalty fee.
To protect yourself from possible rate hike resulting from late payment, consider setting up an automatic bill payment.
This will help you keep the introductory rate for the stated period agreed to in your card agreement.
Have a plan "B.
" Don't lose sight of when the introductory period will end.
If you are not able to achieve your goal before it ends, arrange to balance transfer to a new account.
This way, you can avoid getting hit with regular APR.
There is nothing wrong with having to transfer your balance two or three times if it helps you eliminate your debt.
However, you should know when to "fold your cards.
" Credit card companies may not be too happy if you make a career out of transferring your card balances; it could hurt your credit.
Rather than hurt your credit with a zero interest balance transfer card, use it to your full advantage as a debt-reduction tool.
Getting the most out of it requires you to take some serious steps- set a measurable goal, consider other useful features when choosing your card, pay more than the minimum amount each month and on time, and be willing to balance transfer more than once if necessary.
Getting out of debt is no laughing matter; it is a serious and difficult task.
The good news, however, is that the belt-tightening involved pales in comparison to the benefits of being debt-free.