One very effective method for lowering the interest rate on a debt balance is to initiate a 0% balance transfer. This is especially helpful while paying down debt, as it allows balances to remain at the same rate while they are being paid off. When this is attempted while the interest continues to accrue, paying off debt can feel like bailing out a leaky rowboat… progress – if there is any – is slow, and everything is still all wet!
The first step in saving money with a 0% balance transfer is to procure a credit card that offers this important option. Often these offers will come in the mail, or through email, or even advertisements on television, radio, and the internet. Obviously, the longer the credit card company will offer the zero percent interest balance transfer, the better! This term may be as long as a year, or as short as a few months. In addition, be sure to at least know the rate for the card after the zero percent interest period expires. It could be wise to avoid an account that will skyrocket into incredibly high rates later, if at all possible.
Once the credit card account has been opened, it is time to make the transfers happen. It is wise to transfer the debts that are currently at the highest rate of interest, as they are the ones that can end up costing the most money. Usually, the new credit card company will be more than happy to help talk customers through the balance transfer process – they want the new business, after all! It is very important to remember to close the high-interest accounts from which the balances are transferred, unless there is some compelling reason for keeping them open. Remember that while keeping unnecessary credit card accounts open can seem like a pretty good idea in the moment (“we will keep that card just in case”), extra credit cards can lead a sad majority of people right back into the same debt predicament that they were in to begin with!
Once the high-interest balances are transferred, it is time to make the most progress that you can in paying down the total balance without any interest. This is one excellent reason to select a new card that will allow a longer period at the 0% interest rate… the more time they offer at that low rate, the greater the opportunity that is available to bring down that balance.
Customers must remain very aware of the date at which the 0% interest rate ends for their credit card account! If the balance is not completely paid off by that date, then it may be possible to open another credit card with another company at zero percent interest, and continue the process from there. The same principles will apply, of course. However, it is good to start looking for a new card well in advance of the expiration date for the 0% interest rate, so that the new account is opened in enough time to make the new transfer and save even more money on interest.
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