A 0 percent balance transfer credit card might be the best-kept secret in the debt payoff world.

Unfortunately, more than a third of U.S. adults with credit card debt don’t even know that these cards exist, according to a recent Bankrate survey.

The specific question we asked was: “Do you think that the following statement is true or false? If you have credit card debt, you can transfer that debt to a different credit card and pay no interest for more than a year.” That’s essentially the definition of a 0 percent balance transfer card. Among people with credit card debt, 63 percent thought the statement was true (it is), and the remaining 37 percent thought it was false.

Maybe they thought it sounded too good to be true? I can assure you that 0 percent balance transfer cards are real. Here’s how they can potentially save you a ton of money in interest charges.

Running the numbers

Let’s say you have the average credit card balance ($5,805, according to TransUnion). If you only make minimum payments at the average credit card rate of 19.93 percent, it will take you 208 months (more than 17 years) to pay off the full amount, and it will cost you a whopping $8,205 in interest. Those minimum payments start at $154 per month and decline along with the balance.

What if, instead, you moved that $5,805 over to a 0 percent balance transfer card with an intro offer lasting up to 21 months?

Examples include the BankAmericard® credit card’s 0 percent intro APR for 21 billing cycles on balance transfers, followed by a regular APR between 16.24 percent to 26.24 percent. There’s also the Citi® Diamond Preferred® Card, which offers a 0 percent intro APR on balance transfers for 21 months, followed by a regular APR between 18.24 percent to 28.99 percent. Note, transfers must be made within the first 60 days of account opening with the BankAmericard and the first four months of account opening with the Diamond Preferred.

Dividing $5,805 into 21 equal installments equates to monthly payments of about $276. Paying that amount, you’ll knock out your credit card debt in less than two years without paying any interest.

Note that you will have to pay a balance transfer fee (3 percent of the amount of each transfer, on the BankAmericard and 5 percent or $5, whichever is higher, on the Citi Diamond Preferred). Still, that’s nothing compared to all of the interest that would have accrued. On a $5,805 balance, a 3 percent transfer fee is $174, and a 5 percent fee is $290.

The information about the BankAmericard® credit card was last updated on August 9, 2023.

The true cost of credit card debt

We’ve established that minimum payment math is brutal. But consider this: At the average interest rate of 19.93 percent, even if you committed to paying off that average credit card balance of $5,805 in 21 months, it would cost you $1,118 in interest. If you paid the same amount every month, that payment would be $329.

And if you paid $276 per month (the level payment plan from our balance transfer example) but were charged the average rate of 19.93 percent, you would be in debt for 27 months, with a total interest bill of $1,395.

Credit card debt is a serious problem affecting nearly half of credit cardholders (46 percent, according to Bankrate’s survey). If you have credit card debt — and no shame, plenty of people do — it’s crucial to prioritize your interest rate.

Regrettably, only 14 percent of cardholders with debt said that a low interest rate is the best feature of the credit card they use most often. About twice as many (27 percent) said cash back, which is a mistake. A good cash back payout is 2 percent on all of your purchases. It doesn’t make sense to pay 20 percent interest just to get 2 percent cash back.

It’s also alarming that 43 percent of U.S. adults who carry credit card debt from month to month do not know the interest rates on all of those cards. You get a pass if you’re able to pay in full and avoid interest. That’s also the only time when rewards are worth it. But if you have credit card debt, paying it off as soon as possible needs to be toward the top of your financial priority list.

If you have credit card debt, chances are it’s your highest-rate debt by a wide margin. We could easily be talking about rates that are three, four or five times higher than other financial products such as mortgages, car loans and student loans — even more, in some cases. Credit card debt is easy to get into and hard to get out of. Six out of every 10 people with credit card debt have had it for at least a year, according to a Bankrate study.

The bottom line

A 0 percent balance transfer credit card is an excellent tool that can help you break this cycle. Personal loans and debt management plans crafted by reputable nonprofit credit counseling agencies (such as Money Management International) are other potentially beneficial forms of debt consolidation. Balance transfer cards, though, are the only option that can be interest-free.

I believe that the best way to use a balance transfer card is to refrain from making new purchases. It’s hard to hit a moving target. Instead, divide what you owe by the number of months in your interest-free term and try to stick to that level payment plan. If you can do that, you’ll be able to completely knock out your credit card debt in less than two years without paying any interest. That could represent hundreds or even thousands of dollars in savings.

Have a question about credit cards? E-mail me at ted.rossman@bankrate.com and I’d be happy to help.