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How to Save Money With a 0% APR or Balance Transfer Credit Card

When you're carrying a balance on a high interest credit card, the interest you pay each month can quickly add up. Wouldn't you rather put that money toward more important things (like groceries or paying your electric bill) instead? If you're looking for ways to save money and reduce your monthly expenses, a balance transfer credit card can help.

Balance transfer credit cards offer a promotional low or 0% annual percentage rate (APR) so you can transfer a balance, make purchases or do both for a set time period without accumulating any interest on your balance. If used correctly, a balance transfer card can be a valuable tool for saving money.

How a 0% Intro APR or Balance Transfer Credit Card Can Save You Money

There are several ways you can use a 0% intro APR or balance transfer card to save money.

  • Balance transfers: By transferring balances from cards with high interest rates to the new card, you can save on interest charges. Suppose you owe $5,000 on a credit card with a 16.61% APR and are paying $200 a month toward your balance. At that rate, it would take 31 months to pay off the balance, and you'd pay $1,179.21 in interest over that time.
    If you could qualify for a 21-month 0% APR balance transfer card, on the other hand, you'd have 21 months to pay off that $5,000 before the interest kicks in. By increasing your monthly payments to about $277, you'd pay off the balance without paying any additional interest. Depending on whether the balance transfer fee was 3% or 5% (typical balance transfer fees), you'd pay either $150 or $250 to make the transfer. Either way, you'd still save hundreds of dollars on interest.
  • Balance consolidation: If you have several credit cards with high balances, keeping track of all the due dates can get confusing. That makes it easy to miss a payment (and potentially hurt your credit score). Consolidate those balances onto the balance transfer card, and you've got just one monthly payment to remember. This is easier to manage, and can also make your expenses more predictable, which helps you budget better.
  • No-interest purchases: Some balance transfer cards also offer 0% APR on purchases for a limited time. This can be helpful if you're faced with an emergency expense, such as a car repair or medical bill, that you don't have the cash to cover.

The key to saving money with a balance transfer or 0% intro APR credit card is to create a plan for paying off the balance before the promotional period ends. A simple way to do this is to divide your balance by the number of months in your introductory period and pay that amount toward the card each month.

You generally need good to excellent credit to qualify for a balance transfer card. If you're not sure what your credit score is, check your credit score before you start researching balance transfer cards.

Make a Balance Transfer Card Part of a Savings Plan

Balance transfer cards have the potential to help you save money—but they can also cost you more money in the long run if you're not careful. The key is to follow a few simple rules:

Rule 1: Update your budget. Carrying a balance on a credit card is often a sign that you're living above your income. Your first step to cutting costs: Examine your budget for ways you can trim your discretionary spending. Cutting back on non-essential expenses such as subscriptions, entertainment or clothing will help you save money that you can put toward paying down credit card balances and other debt.

Rule 2: Avoid new spending. Unless you're faced with a true emergency, avoid the temptation to use your 0% intro APR credit card for new purchases. (A broken pipe flooding your kitchen is an emergency; a 50% off sale at your favorite retailer isn't.) If you must use the card for an emergency purchase, commit to paying off that purchase before your introductory period ends.

Rule 3: Pay down other debt. You've been paying $200 a month toward your balance transfer credit card, and that balance is finally paid off. Start putting the $200 toward other debt each month or, if you don't have other debt, into savings as an emergency fund. Because you've grown accustomed to paying $200 toward a credit card every month, you won't miss the money.

Rule 4: Keep an eye on your credit. Getting a balance transfer credit card can reduce your overall credit utilization ratio, or amount of available credit you're using, which can help increase your credit score. Paying the bill on time each month can improve your credit score too. Just be sure you're staying on top of any other credit card and debt payments. Using a credit monitoring service can help you keep tabs on your credit—and you'll get a thrill from seeing your credit score rise.

Finding a Balance Transfer Credit Card


When comparing balance transfer credit cards, the length of the 0% APR period isn't the only factor to consider. It's also important to compare the APR you'll be charged once the promotional offer is over, the balance transfer fee and the value you'd get out of any other fees or perks.

For example, the Citi® Rewards+SM Card from our partner offers a 0% intro APR for 15 months on balance transfers and purchases. After that, you'll be charged an APR of 13.49% to 23.49% on balances, depending on your creditworthiness. You'll pay a 3% fee (minimum $5) for balance transfers, but no annual fee.

The Citi® Diamond Preferred® Card from our partner offers 0% APR for 12 months on purchases and 21 months on balance transfers. Once the promotional period ends, you'll pay an APR of 13.74% to 23.74%, depending on your creditworthiness. There's no annual fee, but the balance transfer fee is on the high end, at 5% ($5 minimum).

Make sure you compare similar features when you're looking for the right balance transfer card for you.

Should You Get a Balance Transfer Card?

If you're trying to save money and you have lots of high interest credit card debt, you may want to consider a balance transfer credit card. Because they temporarily keep interest from accruing, balance transfer cards can make it easier to pay down your debt or handle emergency expenses. As long as you can commit to paying off the balance before your promotional period expires, balance transfer credit cards can be part of a smart savings plan, helping you put your budget back on track.

All information about Citi® Rewards+SM Card and Citi® Diamond Preferred® Card has been collected independently by Experian and has not been reviewed or provided by the card issuer.

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