Using 0% Balance Transfers to Slash Your Credit Card Balances

Slash Your Credit Card Balances

It is all too easy to build up a high credit card balance, and many people who do got there without making extravagant purchases. Even small purchases from that $5 cup of latte to the weekly tank of gas can really add up. At 18 percent interest, those charges can quickly get out of hand, resulting in balances that are thousands of dollars.

Once those high balances are in place it can be almost impossible to pay them down, especially if the interest rate on your credit card is a high one. If you pay only the minimum balance, it could take you years or even decades to pay off those high balances.

Fortunately, there are strategies that cardholders can use to get a handle on their balances and pay them down more quickly. When implemented properly, one of the most effective ways to lower credit card balances is with a 0 percent balance transfer. Many credit cards offer these interest-free balance transfers as a way to gain new customers, and they can be quite effective for those who know how to use them. The key is to read the fine print carefully and make sure you understand all of the terms of the new card. If you fail to read and understand that fine print you could find yourself stuck with that same high balance for many more years.

One of the most important things to understand when it comes to balance transfer cards is that the 0 percent interest rate will be good only for a set period of time. Once that teaser period expires any leftover balances will accrue interest at a much higher rate.

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The key to success, then, is to use that 0 percent grace period to pay off as much of your credit card balance as possible. The first step is to sit down and look at your balances, determining which ones to transfer and which ones to leave alone for now. You will get more bang for your buck by transferring the balances with the highest interest rates, so that is a good place to start.

Once you have determined which balances to transfer, it is time to start budgeting your money so you can throw as much as possible at those transferred balances. Getting those balances paid off quickly while the 0 percent rate is still in effect is the key to success. That might mean a few less dinners out or forgoing small impulse purchases, but it will be worth it in the end.

After you have paid off the cards with the highest interest rates, you can watch for the next offer and repeat the process. The budgeting skills you learn during this process will be invaluable, as they will help you manage your money more wisely in the future. Perhaps that is the biggest benefit of using an interest-free transfer offer to pay off your credit card debt, just make sure you find the best balance transfer card for you first!

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