African American man using credit card on smartphone
WAYHOME studio/Shutterstock.com

A balance transfer can be a valuable tool if you’re struggling with high-interest debt. Many credit card issuers offer cards with introductory interest-free APR periods and these offers allow you to transfer various debts to a new credit card and use the 0% APR period to pay down what you owe.

If you are tired of struggling with debt, a balance transfer could be exactly what you need.

Here are five easy steps to help you make the most of a balance transfer.

1. Take a close look at your debt (and credit score).

A balance transfer credit card will benefit you most if you have high-interest debt and need time to pay it off. Before you get started, however, it makes sense to take a close look at all your debts to see how much you owe.

Review your credit card balances as well as any other high-interest loans you have. From there, make a list of each debt you owe along with its respective interest rate (APR).

You’ll also want to get an estimate of your credit score to make sure you’ll qualify for a balance transfer card. This is because most of the best 0% APR credit cards are only available to consumers with good or excellent credit, or FICO scores of 720 or higher.

2. Compare balance transfer credit cards.

Once you have a good idea of where you stand with your debts, you should start searching for balance transfer credit cards to see how they stack up. One big advantage that comes with looking for a balance transfer card is the fact that you can conduct your search for the year’s best balance transfer offers online.

What to look for when comparing balance transfer cards:

  • APR (annual percentage rate): Most balance transfer cards offer 0% for 15 to 21 months, but make sure to check and compare at least a few offers. Also, note each card’s ongoing APR since your interest rate will reset once your 0% APR offer ends.
  • Balance transfer fee: Some balance transfer cards charge an upfront fee of 3% to 5% of your balance. This means that if you transfer $10,000 in credit card debt to a balance transfer card, you’ll pay an extra $300 to $500 for the privilege.
  • Length of 0% APR offer: Balance transfer offers don’t last forever. Make sure to find out how long each card you’re considering will grant you 0% APR.
  • Annual fee: Most balance transfer cards don’t charge an annual fee, but make sure to check.

Ideally, you should look for a card that gives you 0% APR for as long as you need to pay off your debt. Also, consider the fact that a handful of cards don’t charge any balance transfer fees, but they usually do so at the cost of a shorter introductory offer.

3. Choose your ideal card and apply.

Comparing balance transfer cards online is the best way to find the ideal offer for your needs, but you also need to apply. Fortunately, you can apply for a balance transfer card online just as easily as you searched for and compared offers. You’ll need to provide some basic personal and financial data such as your name, your address, your Social Security number and your income.

After you apply for your new balance transfer card, you can typically get an answer in minutes. If you aren’t notified of your approval right away, you may have to wait for an email from the credit card company.

4. Call the credit card company to transfer balances — or do it online.

Once your balance transfer credit card is approved, you can take steps to transfer your balance. While each credit card issuer offers a different process for this step, you will normally have the option to transfer your balances in one of two ways — either over the phone or online.

Make sure to gather all the information you’ll need to transfer your balances over before you start the process. Details to gather include your credit card account numbers, bank names and addresses and your current balances.

Keep in mind that balance transfers take time. It can take anywhere from a week to a month for your balance to be transferred. Once your balances have been moved over to your new 0% APR credit card, make sure to follow up with your old cards and loans to make sure they show a $0 balance before you stop making payments on them.

5. Create a debt payoff plan.

Now that you have your 0% APR period with your balance transfer card, it’s up to you to put that time to good use. Fortunately, having some time without any interest being charged puts you in a great position to destroy your debt at record speed.

Take some time to sit down with your monthly bills, your bank statements and credit card bills, and your pay stubs to create a simple, pen-and-paper monthly budget. Figure out if there are any areas in your spending you could cut, at least temporarily. Also, determine how much money you can throw at your balance each month.

Remember that each dollar you pay at 0% APR has a bigger impact since none of your money is going toward interest payments. The more you can pay now, the less debt you’ll have to repay later.

Note: Old habits die hard and it will be extremely difficult to get out of debt if you keep adding to the pile. For that reason, we suggest you stop using credit cards altogether while you focus on your debt repayment plan. Put your credit cards away in a sock drawer or another safe place for now. Once you’re debt-free, you can consider using them again.

What to do when the 0% APR introductory offer ends

While balance transfer offers can help you save money on interest while you pay down debt, it’s important to know how balance transfer work because they eventually come to an end. At that point, your credit card’s interest rate will reset at the normal variable APR, which could be on the high end.

If you’re out of debt when your 0% APR offer is over, your best bet is using credit cards with extreme caution. Only charge purchases you can afford to pay off each month, and always pay your credit card bill early or on time. If you continue using credit cards without a plan to pay them off, you could easily wind up in debt again.

If you still have debt when your 0% APR offer ends, you have a few choices. You can continue paying as much as possible to erase your debt as fast as you can, but you could also seek out another balance transfer credit card and start the process over. Just remember that transferring balances to score 0% APR a second time will likely involve another balance transfer fee.

How to do balance transfer with different issuers