If you have a balance on one or more credit cards you already have, you might want to apply for a new credit card with a 0% balance transfer offer.
You may be wondering how it's possible for an issuer to offer 0% interest on balance transfers, but it's true. Balance transfers between many of the best banks are free of interest. Yes, you can move balances from your old credit cards to the new card you apply for and pay no interest on the transferred balances.
If you have a balance on one or more credit cards you already have, you might want to apply for a new credit card with a 0% balance transfer offer.
You may be wondering how it's possible for an issuer to offer 0% interest on balance transfers, but it's true. Balance transfers between many of the best banks are free of interest. Yes, you can move balances from your old credit cards to the new card you apply for, and you won't have to pay interest on the balance for up to a year. Also, some programmes let you transfer without any fees at all, but you must have good credit to be eligible. Other programmes charge a fee of 3 percent of the amount you want to send, but most banks cap the fee at $75. That means you won't have to pay any extra fees if you send more than $2500.
How to Tell if a Balance Transfer Credit Card is Right for You
There may be a few situations where switching to a card with no interest rate is not a good idea. For example, if you only carry a small balance from month to month and plan to pay it off soon, it might be better to choose a different credit card with a different benefit, like frequent flyer miles or bonus points that can be used to buy things, since the savings from 0% interest are small for you.
But most of the time, getting a credit card with no interest is a great deal. After all, why keep paying interest on your credit card balance with one bank when another bank is giving you 0% interest? There is no good reason why you shouldn't save money.
The Pros of a Balance Transfer Credit Card with 0% Interest
Having to pay no interest for a year can be helpful if you need to use your money for other things. With 0% interest, your monthly minimum payment is actually less than with a credit card that charges interest, because more of your payment goes toward paying off your principal each month than toward interest fees.
- On the other hand, a credit card with no interest for a year lets you pay off your debt faster because you might be able to pay more each month since you're not paying interest. For example, if you move $5,000 to a card with 0% interest and your old card had a 12% APR and a 3% minimum payment due, you would have paid $538 in interest fees over the course of a year. But if you have a credit card with no interest, you can put that extra $40 to $50 per month toward your principal and pay off a big chunk of your debt.
- In the same way, a credit card with 0% interest might even let you pay off your balance with less each month if you wanted to. For example, if you transferred $5,000 and planned to pay it off over a year, you would have to pay $444/month with a card that charges 12% interest but only $416/month with a card that charges 0% interest, saving you $28/month.
An Important Caveat
Please keep in mind that if you want to take advantage of any of the 0% balance transfer credit card offers, you have to promise to pay your bill on time every month. If you miss a payment or pay late, you could lose the 0% rate and have to pay a higher interest rate on the balance you owe. Pay attention to your credit card statements and pay on time.
Overall, a smart consumer should take advantage of the best 0% balance transfer credit card offer he or she can find. The best thing to do is look on the Internet for 0% card offers and decide which one is best for you. For example, the Citibank Platinum Select Visa (which doesn't charge transfer fees), the Chase Platinum Visa, and the HSBC Platinum MasterCard are all good options. To get the most out of these offers, you should apply for the best card you can get based on your credit history and transfer as many balances as you can.
