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Pay Off Debt With 0% Credit Card Offers

One of the true perks of owning a credit card is that sometimes, after you’ve built a pile of debt, a balance transfer offer comes along allowing you to avoid costly interest payments.

You can use introductory offers to essentially earn an interest-free loan.Depending on how much money you owe on your credit card and at what interest rate, a balance transfer can save you hundreds if not thousands of dollars.

Unfortunately, a large amount of debt generally translates into a poor credit score.

And often, the people who can benefit the most from a balance transfer offer can’t get approved for one.

Of course, the best way to avoid getting into the situation where you need a balance transfer or interest rate deal to get out of debt is to cut back on spending.

But if you’ve found yourself already in debt, you also can effectively execute a balance transfer by using a 0% purchase APR credit card.

Here’s how:

Take your 0% intro APR card and start using it instead of cash to make as many of your everyday purchases as you can. Then pay only a portion of the balance each month.

Take the remaining money you normally would have spent on those everyday purchases and use it to pay down your high interest debt. You can repeat this process each month for up to half the length of your 0% APR purchase credit card term.

It’s important you don’t do this for the entire 0% APR purchase offer, otherwise you will just replace one debt with another and will have done nothing to improve your situation. Building up debt on your 0% purchase APR for only half the intro term allows you the same timeframe to pay it off, interest-free.

As an example, let’s say you have $5,000 in credit card debt at an interest rate of 20%. If you can pay off $1,000 a month using the above strategy, you’ll end up paying about $300 in interest over a six-month period.

But if you can only make the minimum $100 payment each month, you stand to lose more than $4,000 in interest, and it will take more than seven years to pay off.

Depending on how much debt you have, using your 0% purchase APR credit card to pay down high interest debt can be just as valuable as any balance transfer credit card offer available today.

Just be smart and make sure you leave yourself enough time to pay off your new credit card as well.

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Comments (2)
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2 Existing Comments
  1. Nuts said:
    on April 26th at 11:54 am

    You seem to have conveniently overlooked the quite usual 4% or larger balance transfer fees now in practice. So on top of the teaser interest rate add that fee. Then, usually at a year or less, the rate will most often go sky high. It is quite rare to find a deal worthwhile these days.

  2. #4 said:
    on March 15th at 05:16 pm

    Read on for little ways to save money, and see how your efforts can really add up over time.
    Store physical credit cards virtually on your mobile device ‘ For starters, it simplifies shopping and checkout because of the tap and pay feature. Here are some questions to ask yourself or family members as they work on their list:.