How to save money with a balance transfer card

When you're carrying a lot of high-interest debt, a balance transfer card may actually provide some relief. Here are our top tips.
Written by Holly Jackson, Contributor
Reviewed by Evan Zimmer

The content on this page is accurate as of the posting date; however, some of the offers mentioned may have expired.  

When you're carrying a lot of high-interest debt, it's hard to imagine how another credit card can possibly help your situation. However, the right kind of credit card -- a balance transfer card -- may actually provide some relief.

But before you can realize the benefits of a balance transfer, you have to consider how much you might be paying in interest now.

Let's say you're carrying $5,000 in revolving credit card debt at an 18% APR. If you used the card enough to maintain that balance despite your monthly payments, you would pay a total of $900 in interest your first year. Ouch.

Even worse, let's say you paid only $100 per month until the balance was gone. In that case, paying off your debt would take a cool 94 months -- or almost eight years -- and cost $4,311.18 in interest on top of your balance. That's a lot.

5 steps to save money with a balance transfer

  • Figure out how much debt you owe
  • Compare balance transfer offers to find the best deal
  • Create a repayment plan that lets you pay down debt fast
  • Pay as much as you can toward your balance during your card's 0% APR introductory period
  • Stay the course until you're debt-free

A balance transfer in action

With the prospect of paying that much interest looming, it's no wonder so many people transfer credit card balances to find greener pastures. Using the scenario outlined above, someone could save hundreds or even thousands of dollars by transferring their balance to a balance transfer card like the Citi Double Cash card.

With the Double Cash card, you get 18 months to pay off your balance without paying any interest. However, it carries a balance transfer fee of either $5 or 3% of the amount of each transfer, whichever is greater, if the transfer is made within four months of account opening. Afterwards, it increases to 5%.

Let's say you transferred your $5,000 balance to your Double Cash card. You'd need to pay a fee of $250, but then you could pay down the balance over 18 months and have it accrue no interest. Paying a $250 fee might seem steep, but if that $5,000 was sitting on a card with a high APR, you'd save more money in the long run by avoiding those interest charges.

Balance transfer cards help you save money by providing a temporary respite from the high-interest rates traditional credit cards sometimes charge. And if you want to benefit, all you need to do is apply and take steps to transfer your high-interest balances.

Other balance transfer offers to consider

The Citi Double Cash is a popular option because it features one of the longest intro 0% APR balance transfer offers around. It's also a very rewarding option, as it earns an unlimited 2% cash back for every purchase (1% when you make the purchase, 1% when it's paid off) for no annual fee. However, because it has a balance transfer fee, you'll want to consider the size of the balance you're looking to transfer.

Another good option is the U.S. Bank Visa Platinum Card. It doesn't offer any rewards, but it gives cardholders 20 months to transfer a balance and pay it down as it accrues no interest. After that, a variable APR of 14.49% to 24.49% applies. It carries a balance transfer fee of either 3% of the amount of each transfer or $5 minimum, whichever is greater

There are balance transfer cards that don't carry a balance transfer fee, but more often than not, their intro 0% APR offers aren't as long as cards that ask for a fee, and the other features are typically less then stellar. There aren't many great options to choose from, but if you still want to go that route, consider the First Tech Odyssey Rewards World Elite Mastercard. It offers a intro 0% APR for balance transfers for 12 months and no fee.

Again, keep in mind that paying a one-time fee will usually cost cardholders less than paying a high APR over many months would.

Making a balance transfer work for you

If you're carrying high-interest debt and struggling to find a way out from under it, a balance transfer credit card might give you the breathing room you're looking for. Just remember that most balance transfer cards charge a balance transfer fee equal to 3%-5% of your balance for the privilege.

Whatever option you choose, remember that this is your opportunity to pay down your debt once and for all. Don't take the easy way out and continue making the lowest payments possible. Instead, figure out how many months you have that promotional 0% APR, and use that time to make headway against your debt without the burden of added interest.

A balance transfer can help you become debt-free once and for all -- if you do your part.

[This article was first published on The Simple Dollar in 2020. It was updated in March 2022.]

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