by Julia Borgini

Created on: March 06, 2009

A balance transfer is a great way to save on interest costs if you're trying to pay down your credit cards. It gives you more time to pay off the credit card as well as getting your money work for you by paying off more of the balance with each payment. Instead of having only a small portion of your monthly payment go towards your credit card balance because of a high interest rate, low balance transfer rates mean that more of your money goes towards your debt. This means that you'll save money each month because you're decreasing the amount of money that's being charged the interest. Plus the fact that the interest rate the credit card company is charging you is lower, which means you're saving even more money.

This is why balance transfers have become so popular. Consumers save money each month and then get the satisfaction of seeing their debt decrease, while credit card companies earn money on your debt. Everybody wins.

Balance transfers let you move debt from one credit card to another, usually for a promotional (read: lower) interest rate. Simply call up the the credit card company, and ask them for a balance transfer. They can usually do it for you over the phone directly, and in a few minutes time you'll be on your way to saving money every month on your debt.

Each credit card company has rules specific to each balance transfer deal, so it's important to find out what those are before making the transfer. The promotional lower interest rate typically runs for several months at a time, but then expires. Once it does, the interest rate they charge you is back up to the high one you were trying to escape from, so it's important to know when the expiry date is. Most credit card companies have deals that run anywhere from 6 to 12 months, so search for credit cards that have the best deal. It's worth it to compare credit cards and find the best credit card balance transfer deals, since you could end up saving a lot of money each month.

The major benefit of a balance transfer is a simple one: you save money each month because your credit card balance is being charged with a lower interest rate. Typical credit cards charge anywhere from 14.9% to 16% interest (either APR or PA), so a promotional rate on a balance transfer can lead to some serious savings. Most balance transfer deals have interest rates in the single digits, or even 0%! It's important to shop around to see which company can get you the best deal.

Your payments become more powerful when you're taking

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