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Credit card debt is one of the worst forms of debt that you can hold. Interest rates of 10, 15, or even 20 percent and above are not uncommon for those who borrow money on these cards. This can really add up over time, and the bill for interest cause tighter family budgets. The percentage of people  with credit card debt has inched down in recent years, but there are still many millions of Americans with debt on their cards.

The easiest way to avoid these interest charges is not to run up a credit card bill, but sometimes life will get in the way and lead to unavoidable debts. For those who have reasonable credit histories, it may be possible to avoid many of the interest costs with a balance transfer credit card.

What Is A Balance Transfer Card?

A balance transfer card is a new credit card that offers a low introductory interest rate for a set period of time, usually between six and 18 months. These cards allow for users to cut down on the amount of interest that they would have to pay during the introductory period. Therefore, more of the payment will go to the principal and pay down the debt more quickly. Additionally, less money overall will go to the bank or credit card company. An article by the Harvard Business Review indicated that perhaps paying off some smaller debts without a transfer might be more motivating for individuals. For larger levels of credit card debt, however, it’s a good idea to save the interest.

Read The Fine Print

When choosing a balance transfer card, it’s a good idea to read the fine print. Low interest rates do not necessarily mean completely free of interest. Many of these cards have balance transfer fees that will get added to the balance immediately. They are, in effect, prepaid interest. Therefore, it’s a good idea to figure out how this will impact the overall savings that you might realize. For example, if there is a 5 percent balance transfer fee on a $1,000 credit card debt that you could pay off in three months, you’d pay $50 as a balance transfer fee. If the interest rate was 18 percent in this scenario, you’d pay about $30 in interest if you could just pay the debt off in three months. Therefore, the balance transfer would not help.

What To Look For In A Balance Transfer Card

You’ll want a balance transfer card that has a longer interest-free period. A card that allows for 18 months without interest would probably be better than one that only allowed for six months. Additionally, you’ll want a card that has a very low transfer fee. Free is ideal, but lower could still save you hundreds of dollars in interest costs.

Tips For Success

Make sure that you’re able to pay off the debt within the introductory period. Any debt that is left after this period will be subject to interest costs on whatever balance is left on the card. Also, make sure that you leave your old card open, especially if there is no annual fee. Canceling a card will cut down on your available credit and hurt your credit score. Finally, you’ll want to avoid running up new debt on the old card. If you can’t pay new charges off in full every month, you’ll just wind up in the same situation.

A balance transfer can be a great way to save quite a bit of money in interest charges. There are frequently some costs that come with these transfers. It’s also important to remember that a change in spending behavior is still needed to fully improve your budget over the long term regardless of any balance transfers that you might be able to take advantage of.