0 balance transfer cards are extremely popular as they offer a means to actually save money by simply transferring your credit card balance or balances, to the credit card provider making the offer, well at least for a period of time anyway.

If you take into consideration the current state of the economy, it is somewhat surprising that the number of people who have large credit card balances increases year on year and this trend shows no sign of slowing down in the future. Unfortunately, many of these people are paying high interest repayments for the privilege of having this debt so it is understandable that 0 balance transfer cards are highly sought after.

If you listen to the statistics often cited by the media and political figures the average APR of a US credit card is around 15% and the average debt for a US credit card holder is $8000. This figure is very misleading as most US households probably owe 25% or less of this figure; a more realistic statement would be to say 5% of credit card users have credit debt of $8000 or greater which is a far more accurate assessment of this situation.

5% of credit card holders still adds-up to a large number of people that have a high combined credit card balance all of whom would benefit greatly from the use of 0 balance transfer cards.

Although emphasis is generally placed upon the size of a debt it must be stated that the size of a debt is irrespective; $1000 of debt is as difficult to deal with for someone with no money as $10000 of debt is and as a result the benefits of zero interest balance transfer credit cards are there for all to use.

How do 0 balance transfer cards work?

Quite simply, credit card companies need customers in order to make money therefore, to entice new customers from their competitors; they offer 0% interest balance transfer deals. These deals usually run for a fixed period of time, usually between 6 to 18 months and offer zero interest on balances that are transferred over from other cards, and may even cover purchases made during the same period.

The removal of the interest element of the repayment benefits the card user as monthly interest makes up quite a large chunk of the monthly repayment saving the user a considerable amount of money for the period of the deal.

If it seems too good to be true it usually is, 0 balance transfer cards are no exception.

Obviously, credit card companies are in business to make profit and for them to totally eliminate their ‘pot of gold’ would be nothing short of business suicide so there are certain methods they use to make money.

The first method of recouping some lost revenue is by charging for the balance transfer. Usually, a charge of 3% for the balance to be transferred is incurred. If you are transferring a large amount you should be cautious as 3% could be a substantial amount of money although many companies do put a cap or a ceiling on this charge. It is advisable, therefore, that before signing up for any deal, that this is checked out properly.

Another method that is used is to impose a very high APR upon purchases, in this situation it may be wise to have a secondary card that is designed to benefit the shoppers amongst us and use this solely for that purpose, this will avoid any unpleasant hikes in your bills.

Conclusion

0 balance transfer cards are a fantastic way to reduce your monthly outgoings for a fixed period of time but it is also advisable to maintain the same levels of repayments that were made before the transfer therefore reducing your debt quicker.

Always check the terms of the card, an ideal card deal will run for at least 12 months, have few costs for the transfer process, apply to purchases made during the offer period and have an OK APR when the deal is over which is very important.

Unfortunately, these deals are generally only available to people with a good credit history so check before applying.

And finally; credit card companies have become wise to the ‘card jumper’. When these deals first began many people used to jump from one card issuer to the next and as a result card issuers were losing out on revenue left, right and center.

Your credit history is scrutinized for the tell-tale patterns of this type of behavior and you will be declined more often than approved if you are seen to be jumping, which doesn’t do your credit score any good, so make sure you sign up for a good deal.

When it comes to managing high interest credit card debt, consumers are always looking for tips or tricks to help pay down debt. For many years taking advantage of balance transfer cards has been a popular way to reduce high interest credit card debt. This remains an option today in spite of the fact that the credit card industry is going through many changes. Before jumping on a balance transfer offer however consumers should be aware of both the benefits and drawbacks in moving balances from one card to next. The following tips can help you save money and avoid common pitfalls associated with balance transfers.

Understand Terms and Conditions- It is wise for all consumers to read the fine print and understand all the terms and conditions before applying for any credit card. This is especially true when moving high balances to a new card. In most cases balance transfer offers include a very low interest rate that expires after the introductory period. Find out what the interest rate will be after that period to determine if moving the balance from your current card is really the going to save you money in the long run. This becomes easier to determine once you factor in the transfer fees that come hand in hand with transferring balances. These fees have doubled or in some instances tripled in recent months.

Understand How Transfers Affect Your Credit- In the past when balance transfer offers were more plentiful and lucrative, some consumers used balance transfers as a way to avoid paying interest all together. If that is your strategy you better think twice before moving balances since opening new accounts will eventually catch up with you as card issuers view your credit history. This can cause a drop in your credit score as well as increased difficulty in securing other types of loans or balance transfer cards.

Consolidate Other Debt- Consumers often begin to feel overwhelmed by the number of accounts they have to keep track of each month. If you have done your homework and the cost of transferring many accounts onto one new card are not exorbitant, having just one monthly payment can make managing your accounts easier. You can also move debt outside of credit cards if you offer includes convenience checks which can be used to pay off other debts. Consider how long you will need to pay off the new debt, keeping in mind the fact that after the introductory period is over you will likely have a higher interest rate on a now higher balance.

Handling Old Accounts- Once you have decided to transfer your balances to a new card, you will have to commit yourself to not incurring additional debt on your older credit cards that are now paid off. Leaving your accounts open will be better for your credit score however many people are tempted to rack up new charges once they have the available credit to do so. The result is you find yourself deeper in debt with more financial burdens than you started out with before the balance transfer.

As you can see, using a balance transfer card can be a good way to reduce debt by paying less interest on your balance each month. By following the tips mentioned you can avoid the negative aspects of balance transfers while gaining the benefits.

Credit cards with their schemes of deferred payment provide people with cash they did not necessarily have in their bank accounts. In a flash, we bought that sweet little dress in the shop window or the hard-to resist computer gizmo. Unfortunately, that flash did not come from a magic wand but from credit cards whose bills we ultimately had to pay for with cold hard cash. In this bleak scenario of huge debts came a temporary lifesaver called balance transfer credit cards, a card to which we can transfer our current balance. The debts of all our credit cards are combined into one debt that can be paid off with a single monthly payment with low interest rates.

Selecting the Best Balance Transfer Card

There are many balance transfer cards available in the market and since it is going to be used to settle debts, it ‘pays’ to read the fine print. This will help you find the best balance transfer card. Ideally, go in for a credit card that does not charge any fees for the transfer, which has 0% introductory rate and comes without annual charges at least for the first year. You can and should negotiate for the same for subsequent years as well. Generally, the card should only be used to transfer balance, while another credit card is used to make purchases. However, if you do use it for buying things, another reading of the fine print helps.

Find out if the credit card limits and the time period for making purchases. Find out if they charge high interest rates on purchases as you may just wind up with one more overdue debt. Check if the credit card offers cash-back rewards, because that can lower your purchasing cost that is useful when you are trying to control your debt.

Once you have decided, keep your options open. You can, and many do, move from one balance transfer credit card to another. This can be done when it is time to pay the annual charges or when the zero-interest introductory offer is over. This will keep both your debts and your blood pressure at a manageable level.