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Getting the benefits of a balance transfer card

By , CardRatings contributor

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Are your credit cards doing some heavy holiday lifting this season -- maybe a family vacation to Cabo or life in general is giving your wallet a wallop? Whatever the reason, credit card debt is no way to start the new year, so it's time to take a step toward lowering yours.

One way to get a handle on your finicky finances is with a balance transfer credit card. Typical balance transfer cards offer low -- and even zero percent -- APRs for a set, extended period of time. With four interest-rate hikes in 2018, thanks to the Feds, now is definitely the time to consider transferring your credit card balance to a different card with little to no interest for that introductory period.

Standard APRs currently range from the mid-teens for those with stellar credit to the high-20s for those with not-so-stellar credit. Transferring to a card with 0% interest can produce substantial savings. If you continue to make your same monthly payment, except now with a lower interest rate, you might really enjoy watching your balance fall as more of your money goes toward principal instead of interest.

How to choose a balance transfer credit card

If you decide to go the balance transfer route, there are a few key components to consider before making your decision on which card to choose for application. There are the no-interest-balance-transfer cards, the long-intro-period cards, and the cards with the best long-term interest rates. The one you choose to apply for should fit your situation. Here are a few tips to help you on your journey.

Match your credit score

The first thing to check is whether you need an excellent credit score -- a catch that may stop this from being your escape plan. It's an ironic requirement since many of those who need the balance transfer, need it because they're in financial trouble. Financial trouble usually spells a credit score on the low end of the spectrum. But if you can qualify, this route wil save you the most money in the end.

Consider…

  • ... the Citi® Double Cash Card - 18 month BT offer (Citi is a CardRatings.com advertiser), which offers 18 months with a 0% APR on balance transfers. After the intro period, your rate goes to 15.74% - 25.74%* Variable.

Select an introductory period

If the balance you're looking to transfer is significant, you'll benefit more from a long intro period. Cards like the Citi Simplicity® Card - No Late Fees Ever and the Wells Fargo Platinum Visa® Card offer extended time frames with no interest in which to pay off your transfers. Transfers must be made within the first four months of the new account, but Wells Fargo gives you 18 months, after which the interest rate goes to 13.74%-27.24% Variable, and Citi gives you 21 months to get the job done before the APR reverts to the regular rate of 16.24% - 26.24% Variable.

If you can't pay off the balance in the intro period, consider…

If your credit score is not in the good or excellent range, or your balance is too big to be paid off in the intro period, you can apply for a card that has a lower long-term interest rate. That way whatever balance is left over at the end of the 0% offer, will not cost you as much to pay back.

  • Barclaycard Ring® Mastercard® offers a no-interest balance transfer Within 45 days of account opening It's one of the lowest variable interest rates on the market -- 14.24% Variable. A rate that low makes this a money-saver any way you look at it.

  • Another option if you don't qualify for a longer term balance transfer offer, is the Capital One® SavorOne℠ Cash Rewards Credit Card . This card has an offer similar to Barclaycard Ring® Mastercard®, offering a starting variable interest rate of 15.24% - 25.24% (Variable) after the intro period has ended.

How to use balance transfer credit cards wisely

Don't be fooled into thinking a balance transfer card is your financial knight in shining armor. Just as with any credit card, cardholders need to exercise fiscal responsibility and financial due diligence in order to reap any benefit from the balance transfer card.

If you are not organized enough with your monthly budget or don't think you will be able to pay off the transferred amount within the low-interest time frame, this may not be the best option for you. The hundreds or thousands you were supposed to have saved on the first card could instead end up on the second card, and your financial situation would not have improved.

A balance transfer credit card can help you tackle debt if you do the math and follow through by eliminating debt instead of adding to it. It's important to understand all the fees and terms associated with each credit card before you make a change. Should I get a balance-transfer credit card? can help you explore the areas where you may need more information.

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