If you're deep in credit card debt, a 0 percent interest balance transfer credit card is an excellent tool for debt elimination. The zero APR credit card is offered by credit card companies as a means of getting you to switch accounts to them, and typically offer a low – often 0%, but typically 2-3% – initial interest rate for the first six to twelve months.
The strategy is simple. Transfer your high balance accounts to a 0 APR credit card, cut back on frills and aggressively pay down the transferred balance.
It's very important to remain fiscally disciplined. While doing this, get in the habit of not using credit for anything. The weak point of the strategy is you. Get out of the habit of carrying your credit cards with you; if you absolutely have to use the plastic money to purchase things, use the debit card for your bank account instead.
There's more to debt elimination than just the use of a zero percent interest credit card. You also need to log what you spend money on, and why. Look for expenses that can be trimmed out. Do you hit up a Starbucks every morning on the way to work? Those $ 4 lattes, over a typical 23 day workweek, add up to $ 92 that can go directly to debt reduction.
Do you eat out for lunch rather than packing one yourself? Most lunches can be packed for $ 1 per day or so; compare this to the typical $ 7 lunch at a fast food joint, and multiply by the number of working days in a month; just this little switch can trim $ 138 from your expenses in a month. Combine that with skipping the morning latte, and you're on track to pay off $ 3,000 in credit card debts in one year. At a 0% interest balance transfer card's introductory rate, that $ 3,000 goes directly into principal reduction, not paying off interest.
Not all 0% interest balance transfer credit card offers are identical – be sure to shop around. Likewise, be sure to mark the payment dates on your calendar and send them in a week early or pay them electronically. If you're very careful about watching the low interest credit card offers, you can stage debts between multiple cards, taking advantage of low interest rates.
Each time you're about to run through the low interest introductory rate, be prepared to move the balance to another low interest introductory rate card. You can not do this indefinitely, because each time you do a balance transfer of this nature it shows up on your credit report, and eventually, the offers will dry up.
Finding a good 0 percent interest balance transfer credit card can take a bit of research, but with the aim of getting out of debt, the effort pays off quickly.