Playing the Balance Transfer Game to Reduce Debt

Many of life’s troubles are a result of, or magnified by poorly managed finances. The stress that creeps up when bills are due and funds are not available may even contribute to high blood pressure, insomnia and other health concerns that negatively affect the quality of life. The level of stress can boil over into conflict on the job and with family. That’s why it is so important to get a handle on debt.

License: Creative Commons image source
License: Creative Commons image source

In recent times, many people have come to rely on credit cards to pay for necessities. While it is one way to secure the necessary funds, it’s a risky one. With interest rates of 14.99% and above, the cost of carrying a significant balance month-to-month will be costly and may make it difficult to pay off. That is unless you know how to use a balance transfer to your advantage.

Credit cards can be used to pay down your debt! The trick is to have balances that you’re working to pay off held in credit card accounts that have a low or zero APR. The hundreds of dollars you’ll save over time in interest charges can then be used to pay down the principal.

Balance transfers are the tools you’ll use and the highly competitiveness of credit card companies provides an excellent opportunity to secure the best rates and terms. Here’s how the transfer game works:

Compare balance transfer offers you get in the mail and online to find one with zero or a low APR rate for the longest period of time. Typically the lowest rates are reserved for those with excellent credit (700+), but don’t be turned away from considering a transfer, if your credit is mid-range. Lowering the APR even by a few percentage points on a large balance will save substantial money, lower the principle sooner and, in the long run, be worth the effort. In addition to the lowest APR for the longest time frame, here are other important factors to compare when choosing a balance transfer offer:

Transfer Fee: Once a common perk used by credit card companies to lure new customers, fee-free transfers are rare these days. Most card issuers charge a one-time balance transfer fee of 2-5% of the amount transferred. Look for an offer with a cap on any transfer fee to avoid an excessive charge. Never make a transfer, if you won’t save more than the transfer fee.

Purchase Rates: If you’ll be using the card for purchases, it’s important that the offer includes the same low or 0% on those transactions, as well.

Ongoing Interest Rate: This is the standard rate that would be charged without the introductory offer. It’s important to find a card with the lowest ongoing interest rate in case you have trouble moving the balance or other unexpected reason.


The following list demonstrates the important points you need to consider when choosing a balance transfer to meet your needs. The rates are the best currently available:


  • Interest rate that applies to the transferred balance – 0%
  • How long that rate applies – 18 months
  • Interest rate that applies to purchases during that period – 0%
  • Interest rate after intro rate expires – 14.99%
  • Fee charged for the transfer – 3% of transfer
  • Annual fee applies – None


Working out the Details

If you do the calculations on a $5,000 balance transfer from an account charging 18% to the Citi Simplicity® Card with the above terms and agree to payments of $320, you would save $1,200 over the course of the 18-month introductory period and have the debt paid off! Of course, this only works if there are no additional purchases made on the account!

The next step is crucial in realizing the effectiveness of playing the transfer game, especially if you have overwhelming credit card debt that will take years to pay off. First, you need to know the date that the introductory rate on the transfer will expire. Second, a month prior to that deadline transfer the remaining balance to a card offering the best rates available. Timing is the key to avoid paying any interest, so be prepared early and allow plenty of time for the transfer to go through.

The bottom line is that anyone who is determined to pay off credit cards, a balance transfer is an effective tool when used with care. Introductory rates on balance transfers require on-time payments to remain active. So be sure you can afford at least the minimum payment every month. Even one late payment will terminate the low or zero percent interest rate and supersede it with a rate even higher than that standard APR.

About the Author: Noreen Ruth is a contributor to and numerous financial-related blogs and websites. She specializes in credit and debt-related issues and enjoys educating consumers about the latest rules and regulations, as well as ways to build, improve and maintain good credit.

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  • I have managed to reduce my credit card debt by transferring balance at 0% percent rate though I found it very hard to remain active in monthly payment. So, strong determination is a must to gain the advantage.