Saving Interest with a Balance Transfer

Credit card companies charge high interest rates. For those who let their debt from credit cards spiral out of control, this can mean that they have insurmountable debts to pay back. One thing that they can do to make sure that their debts stop growing at the high interest rates they are currently paying is to obtain balance transfer credit cards that offer them 0 percent interest rates.

Several Hundreds of Dollars Saved

Balance transfer credit cards can be very advantageous to people with high interest rates on their credit card debt. For example, the average interest rate for credit cards is around 13.36 percent. If people are paying 13.36 percent interest on a $5,000 debt, they are paying around $650 in interest. If they were to transfer their balances to credit cards that offer them 0 percent interest, they would significantly lower their monthly payments.

With a 0 percent interest rate, these people would be able to pay more each month toward the debt and in the process, they would be lowering their balances faster than if they had to pay a significant amount toward interest. Because they can pay the balances down at a quicker pace, they will be making it possible for them to climb out of credit card debt. With the ever-increasing interest they were paying, being debt-free may have seemed like an impossibility to people.

Open Enough Balance Transfer Credit Cards to Make a Difference

The person who has $5,000 of credit card debt may not be able to transfer that much to 0 percent balance transfer credit cards. These credit cards will have credit limits just like any other card, and they, generally, will only allow a limit of about $3,000. In this case, this customer will need at least two balance transfer credit cards to cover the entire amount to make transferring their balances worth while.

Fees for Balance Transfer Credit Cards

When considering balance transfer credit cards, people will have to pay fees. This fact doesn’t have to scare anyone off; these fees can be as low as three percent of the amount of the balance. When they find these types of credit cards, they may be able to obtain a time period of as much as 21 months that they can enjoy the 0 percent interest rate.

Some credit cards have shorter 0 percent time periods, such as 15 months, but this may be sufficient to pay some people’s debts. The added advantage with these cards is that they may give the cardholders the opportunity to obtain cash back rewards which can be placed toward the fees they will be charged for transferring their balances.

Good Timing for Balance Transfer Credit Cards

At the moment, anyone who needs to obtain balance transfer credit cards couldn’t pick a better time to do it. Right now, the Federal Reserve is keeping interest rates at a low level and it’s projected that this will be the case until at least 2013. The current rates are as low as they have been in years, and people can’t expect this to be the case ad infinitum. The possibility also exists that credit card companies will stop offering these types of deals. It has already started to occur; credit card companies were offering and advertising for 0 percent balance transfer credit cards at a much more furious pace than they are currently. This gives people fewer choices, but they do still exist and people can find them if they look.


Noelle Greenwood is a consumer finance advocate who wants to make sure the consumers come out on top and are not at the mercy of the banks or marketing spiel. Noelle helps run a number of finance comparison websites including High Interest Saving Account which compares high interest savings account products from leading banks.