What is a zero percent balance transfer offer?

Credit card companies that offer credit cards with an introductory zero percent balance transfer for a limited time can help give new card members a way to help relieve debt. By taking advantage of these introductory rates, you can have your existing balance on other credit cards paid off by transferring it to a new card and will not accrue interest on that transferred balance for the duration of the introductory 0% annual percentage rate (APR) offer.

The introductory zero percent balance transfer rate is temporary. The duration of the introductory 0% balance transfer offer varies based on individual offers. After this introductory period, the remaining transferred balance is subject to the standard balance transfer rate for the card. You should pay attention to the duration of the introductory offer because, once it is over, there will be an increase in your interest rate. 

It is always important to familiarize yourself with the terms and conditions for any credit card. For example, in some cases, new purchases on cards with an active 0% balance transfer offer will incur interest at the standard purchase APR, unless the 0% offer applies to new purchases as well. The amount transferred through such 0% balance transfer offers is often subject to a one-time balance transfer fee. This fee, typically 3% – 5%, is added to the new balance.

Why Apply For A Zero Percent Balance Transfer?

A zero percent balance transfer can be an effective way of consolidating or reducing debt. 0% balance transfers can help you to save on interest payments you are making on your existing credit card.

For example, consider you owe $3,000 on a card with an APR of 15%. If you continue to pay interest while reducing the balance by $215 each month, you will still have accrued $525 of interest over the 14 months it took you to pay off the balance, assuming you make no additional purchases.

But, let’s say that you accepted a 0% balance transfer offer of 14 months with a 3% balance transfer fee. You would pay off your old balance of $3,000 and would incur a new balance of $3,000 plus $90 in balance transfer fees on your new 0% balance transfer credit card. Because of the 0% balance transfer offer, you could pay off your new balance in 14 months and save over $400 in interest assuming that you make no additional purchases and make monthly payments of $221.

It is important to remember that, no matter how much you are struggling with your debt, you should continue to make all of your payments on time because only applicants with excellent credit will qualify for introductory credit card offers like zero percent balance transfer. And, for those looking into taking advantage of a 0% balance transfer, consider making a comprehensive plan for eliminating credit card debt that focuses on maximizing income, minimizing expenses, and paying down the entire credit card before the introductory rate expires.

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