0% Balance Transfer Credit Cards: How to Avoid Costly Mistakes & Take Advantage of a 0% APR

0% Balance Transfer Credit Cards: How to Avoid Costly Mistakes & Take Advantage of a 0% APR

You've seen the offers: 0% balance transfer, pay no interest for one year. Currently, the Chase Platinum Card even offers a 0% interest rate for up 15 months. For those carrying balances on high interest credit cards, the savings that can be reaped with these balance transfer offers is tremendous. However, one false move and you'll not only lose the 0% rate, you might also end up paying a higher rate than the one you previously paid. Credit card issuers call it the default rate, and it can range up to 29.99% or more, a far cry from 0%.

How can a 0% balance transfer dream turn into a 29.99% nightmare? Its not as uncommon as we'd like to think. In fact, it could happen with only one late payment. Yes, missing a payment constitutes default in most contracts, bringing with it the horrific default rates attached to most, if not all credit cards. Luckily, many credit cards won't throw the book at you if you simply miss one payment by a few days. If your credit is questionable, however, one late payment could be enough to trigger the default rate.

Fortunately, there are easy ways to prevent this. One very effective, time-saving method available is automatic payment. You can schedule a monthly payment directly from your bank account to your credit card, ensuring payment is received on time. The next easy way to maintain your 0% interest rate is to simply pay your bill when it arrives. E-mail bill notifications are also a great way to keep you up to speed with payments.

The money a 0% APR can save you over the course of 12-15 months greatly outweighs the burden of paying a bill on time. Besides, defaulting on a high interest credit card will also cause your rate to hit the ceiling, and probably much quicker than it would with a new 0% balance transfer credit card. It is never a good idea to miss a credit card payment for this reason alone, and many people seek 0% balance transfers because they have been unfairly hit with a default rate by their current credit card issuer.

Credit card companies give you the opportunity to save with 0% interest rates for up to 15 months because they want you to use their card. Not only do they make money every time your card is swiped for a purchase, they also expect to make money on your balance once the 0% APR expires. The 0% offer works for credit card companies because it brings in new customers. More importantly, however, the 0% offer works for you because it can save you a substantial amount of money on interest during the introductory term.

Just how much you can save will vary. For example, transferring a $2,000 balance from a 13.99% credit card to a 0% balance transfer credit card offers you the opportunity to save over $200 in interest (assuming no additional usage during the year). Not too bad, but small change compared to the $1200 or more you can save by transferring $10,000 to a 0% rate.

Everyone with decent credit and a revolving balance should take advantage of 0% interest balance transfers to help reduce the burden of paying off credit card debt. Why pay to borrow money when someone will lend it to you for free? It simply doesn't make sense. With credit card issuers like Citibank, American Express, Chase, Discover, MBNA, HSBC, and others fighting to gain you as a customer by offering a 0% rate, there has never been a better time to cash in on the hundreds to thousands of dollars these companies will allow you to save just for transferring a balance to one of their credit cards.

Jeff Weber is the president and CEO of Credit Card Depot Inc., an online credit card marketing company. For over two years, the company's primary website, http://www.credit-card-depot.com, has provided consumers with detailed credit card application information as well as articles to help consumers find the best value in credit cards. At Credit Card Depot, you can compare over 30 0% Balance Transfer Credit Card Applications from every major credit card issuer mentioned in this article and apply online for approval. Credit Card Depot also feature a wide variety of credit cards that offer a 0% interest rate on purchases and balance transfers for up to 15 Months.