How Does No Interest Credit Card Balance Transfers Work?

They come in the mail--offers for low or no interest credit cards. A cynic would tell you that it's just a trap to get you to use them for things you can't really afford, and then you'll get stuck with high bills for the rest of your life. While that may be partly true (the credit card companies do want you to use the card more than you can afford to), zero balance credit transfers are a very useful tool if you want to pay off debt on your own. The credit card company offers you a credit card with zero interest for 6 months as long as the balance is paid off before that 6 months is over. If any payment is even an hour late or there is even a 1-cent balance left on the card after that introductory period, they will charge the account all of the interest and fees that accumulated over the whole period.

With a little financial discipline, these low and zero percent transfers can net you hundreds of dollars in savings over several years. Here's what you have to do: Pay very close attention to what accounts you have open, with whom and the exact date the introductory period is over. A notebook or a stack of file folders is useful for this. Sign up for one of these cards at a time to make it simpler, though using two at a time will make the debt disappear faster.

Sign up for a zero percent introductory card offer (assuming that you qualify for the zero percent offer) and transfer as much debt to this card as you possibly can right away, preferably from other cards with very high interest rates. Since there is no interest on this new balance, the minimum payments will be smaller. Even though your minimums go down, continue paying those amounts, as that will put more of the payment toward principle than before, ultimately eliminating your debt. When the card is close to the end of the introductory period, simply sign up for another zero or low interest introductory rate card offer. Transfer the balance from the first card to this one. As long as you don't run out of offers to take (and if the credit card companies' advertisers keep doing what they do, you won't), you can pay off all your credit cards interest free relatively quickly. Even if you don't have a tremendous amount of debt, you can remain interest free for years.