4 Ways To Utilize A 0% APR Credit Card Balance Transfer
4 Ways To Utilize A 0% APR Credit Card Balance Transfer Skip to content
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By Joshua Caucutt Date September 14, 2021FEATURED PROMOTION
In my last post about balance transfer arbitrage, I pointed out that banks and credit card companies are once again offering 0% introductory rates on transferred balances. Several years ago, it was common to find balance transfer offers where there was no balance transfer fee, no interest, and the user was not charged an annual credit card fee. In recent years, with the tightening of loans during the economic recession came an increase in balance transfer fees to anywhere from 3% to 5%. However, the current crop of offers has started to move back towards 0% balance transfer offerings. How can you take advantage of them? Here are four unique strategies to benefit from these offers:1 Pay Down High Interest Rate Credit Card Balances
The most basic and practical use of 0% APR balance transfer offers is to pay down high interest credit card balances more quickly. If you have run up a large credit card balance that is carrying an interest rate of 8%, 14%, 17% or even higher, transferring that balance to a new card with a 0% rate can really help you to get a head start on paying down that debt. The danger comes when folks continue to use credit cards after transferring the balance instead of cutting it up or freezing it until all of the debt is gone.2 Pay Down Other Loans
I know people who have used 0% APR balance transfer offers in order to get ahead on larger loans like college student loans, home equity lines of credit, and even car loans. This use of the balance transfer can be a little tricky because the loan must be paid off or transferred to another 0% offer when the introductory period ends, otherwise you might be facing an extremely high APR at the end of the introductory period. For instance, if you owe $10,000 at 9% on your family car, you might be able to transfer that balance to a new credit card and reduce your interest rate to 0% for twelve or even eighteen months. By doing this, your payments will go 100% towards the principle for the length of the introductory period and you can make huge progress on paying down your balance. However, when the introductory period is over, your rate could jump up to a level much greater than 9% – unless you transfer it again or pay off the balance in time. The best time to use a 0% balance transfer for this purpose is when you are close to paying off a particular debt – if you know that you can completely erase the balance during the introductory period.Motley Fool Stock Advisor recommendations have an average return of 397%. For $79 (or just $1.52 per week), join more than 1 million members and don't miss their upcoming stock picks. 30 day money-back guarantee. Sign Up Now