subject: Making Dollars And Cents Of Credit Card Balance Transfer Offers [print this page] As of the end of 2009, the average credit card debt per U.S. household (in households with credit card debt) was $15,519, with the total number of credit cards in circulation in the U.S. rounding out to a whopping 576.4 million. So chances are you carry a balance on one, if not many, credit cards. If you carry a balance on your card (or cards), you could save a considerable amount of money by transferring your high rate balances to a card with a lower interest rate. Read on to learn how a 0 APR balance transfer could help you pay off your credit cards faster, and save a lot of money in the process.
Although the credit CARD act of 2009 has significantly helped consumers start to pay off credit card debt by limiting the, ahem, "liberties" many companies were taking with charges, fees and billing practices, Americans still have a long way to go. Many companies have begun to compensate now that they can't charge for every single little thing, and interest rates are sky-rocketing.
You don't have to be stuck with constant hikes in your interest rate, however. Many credit card companies are still interested in obtaining new business, and they are offering some pretty sweet deals to win over new credit-worthy customers. By doing a little shopping around and comparing the many different transfer offers currently available right now, you could possibly save yourself hundreds or even thousands of dollars a year in interest charges.
If you're like the average U.S. household with credit card debt and you have $15,000 in debt with average interest rates of around 14%, lowering your APR by just 5% on that amount would mean an annual savings of about $750. Now imagine you took advantage of a 0 APR balance transfer offer, and transferred your high interest balance. You could save more than $2,200 in the first year. Although many transfer offers do come with a one-time transfer fee attached, usually around 3 to 5% of the total, even with the transfer fee, you would be saving a lot of money.
Maybe you don't have $15,000 in debt. That doesn't mean you still can't save. Let's take a look at three different scenarios where credit card holders can save money by transferring a balance to a lower rate card.
- A card holder with a balance of $9,000 and a 13% APR would save $1,242 in the first year by transferring their balance to a 0% interest card.
- A family with three credit cards totaling $20,000 and an average APR of 15% would find their annual savings to be $3,265 if they transferred their balances to a 0% interest card.
- A couple whose combined debt is $25,000 and who pay an average APR of 24% on their cards would realize a savings of more than $6,700 a year in interest by completing a 0 APR balance transfer.
In all of these scenarios, you can see that the average amount of savings is noteworthy - even considering any balance transfer fees. So, as you can see, it really does make "cents" to transfer your high interest debt using a 0 APR balance transfer offer.
New laws may lead banks to decrease the length of 0% balance transfer offers, making the balance transfer option less valuable, so don't wait too long to get started with a balance transfer. Do your research, and you could be pleasantly surprised by the decrease you see in your debt.
