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How to Get Out of Debt Faster While Paying Less

By: The NerdWallet Staff
Est. reading time: 3 min

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Credit card debt stings. The good news, however, is there’s a way to pay it down with less money in a shorter time. How? By moving your debt to a balance transfer card, which is a credit card that offers a lengthy 0% introductory interest period. Unlike an everyday credit card (which charges interest on balances you carry from month to month), these cards give you time to pay down your transferred balance without interest charges stacking up. (Note: most balance transfer cards have different 0% intro interest periods for purchases; once the purchase intro period ends, you will still be charged interest on purchases made on the card, even if you are still within the balance transfer intro interest period.)

For those paying down high-interest debt, such a move can save serious money on interest charges if done strategically. For example, compare the difference between paying down an $18,000 debt on a 21% APR card and a 0% balance transfer card. The latter will typically charge you a one-time fee of 3 to 5% on the balance transferred (or a $5 minimum fee, whichever is greater). Then, you won’t be charged any interest on your transferred balance for the duration of the 0% intro APR period. Using the balance transfer card could save you around $2,599, even after paying a 3% transfer fee of $540, assuming the debt is repaid in full within the 0% intro interest period (in this example case, 18 months). As a heads up, the amount you may qualify to transfer and save depends on a variety of factors including your credit worthiness.

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How balance transfers work

While the exact process for balance transfers can vary widely, here are the steps you generally have to take when working with major issuers:

1. APPLY FOR A CARD with an introductory 0% APR offer on balance transfers or use an offer on a card you already have. To qualify for the best offers, you generally have to have good or excellent credit (typically, FICO scores of at least 690). Something to keep in mind: Same-issuer transfers generally aren’t allowed. For example, if you want to transfer a balance from a Citi card, you can’t transfer it to another Citi card.

2. INITIATE THE BALANCE TRANSFER. If you’re doing this online or by phone, you’ll need to provide information about the debt you’re looking to move, such as the issuer name, the amount of debt and the account information. Sometimes, balance transfers can also be initiated using convenience checks, or the checks issuers send you in the mail. Before using one, though, read the terms to find out whether it actually will count as a balance transfer and what your interest rate will be.

3. WAIT FOR THE TRANSFER TO GO THROUGH. Once the balance transfer is approved, which could take two weeks or longer, the issuer will generally pay off your old account directly. That old balance — plus the balance transfer fee — will show up on your new account.

4. PAY DOWN THE BALANCE. When that balance is added to the new card, you’ll be responsible for making monthly payments on that account. And if you pay it down during the introductory 0% APR period, for example, you could potentially save a bundle. If you still have any transferred balance left over after the 0% intro period, you will only be charged interest on that remaining balance moving forward (plus any purchases not under the intro period APR).

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