Here's What Most People Get Wrong About 0% Balance Transfers
KEY POINTS
- Balance transfers can save money, but only if you change your spending habits that created the debt.
- Use the 0% intro APR window with a calculated monthly goal and a spending plan to make real progress.
- Other common traps are late payments, new charges, and failing to pay off your full balance in the 0% intro APR window.
According to a recent LendingTree report, there are 109 different 0% intro APR balance transfer cards from 31 issuers available right now. It's no wonder they are popular -- balance transfer cards can give people a real shot at breaking free from high-interest debt.
But while the offers are easy to find, using them properly is where most people trip up. Without a game plan, these cards just become a slick way to kick the can down the road.
A 0% intro APR offer won't fix bad financial habits
The most common mistake people make with balance transfer cards is treating the card like a solution when it's really just a tool.
It's like buying a super fancy oven -- then expecting it to do all your cooking for you.
Moving debt from one credit card to another doesn't wipe it clean. It just buys you some breathing room (the 0% intro APR window) to pay the debt off faster.
To get out of debt -- and stay out -- you need to make a plan to pay off the balance in full, and also adjust underlying spending habits.
Paying off your debt within the 0% intro APR window
Once a balance transfer goes through, the clock starts ticking. You've got a limited-time window to pay off that debt before the high interest kicks back in.
So here's a simple plan: Take your total balance and divide it by the number of 0% intro APR months.
That number is your monthly payoff target.
Example: If you transferred $6,000 to a card with an 18-month 0% intro APR, you'd want to target a minimum of $334 in monthly payments to have your debt repaid at the end of the 18-month period without paying any interest. If you can afford to pay $500 per month, you'll have the debt paid off in just a year!
Keep in mind: This doesn't include any new purchases you make on the card. It's smart to treat this card like a no-spend zone until your debt is gone.
It's also smart to choose a card that offers the longest 0% intro APR period possible. More time = lower monthly payment = better odds of wiping out your debt completely. Check out today's best 0% intro APR balance transfer cards that give you up to 21 months to pay off your debt.
Other common 0% intro APR gotchas
Even if you have good intentions, it's still easy to fall into common traps with balance transfer cards. Here are some other things to watch out for:
- Missing the transfer window. Most cards require you to transfer your balance within 60 or 90 days to qualify for the 0% intro rate.
- Paying late. A single late payment can void your 0% intro offer. Then you're back at sky-high interest rates.
- Making too many new purchases on the card. If you continue your old spending habits, you could build a new debt pile after you've paid off your old one.
- Thinking it's free. Most cards charge a transfer fee of 3% to 5%. Always do the math with a payoff calculator to make sure you're coming out ahead.
A 0% intro balance transfer card isn't a silver bullet, but it can be the tool that gives you a fresh start.
But you've gotta put in the hard work and stick to a payoff plan. No more kicking the can -- it's time to crush it. Find the right 0% intro APR card today and make this the start of your debt-free journey.
Our Research Expert
Joel is a full-time Personal Finance Writer at Motley Fool Money, known for his clear, approachable voice on topics like credit cards, savings hacks, and side hustles. He’s been writing about money since 2018 and previously managed editorial content for the How To Money podcast.