This article is by staff writer Holly Johnson.

When my husband and I started dating in 2004, he moved across the country to go back to school and live closer to me. Yep, much to our surprise {insert sarcasm here}, his bachelor’s degree in theater arts hadn’t helped him land his dream job. Therefore, he decided to do something different instead and chose to pursue a bachelor’s degree in mortuary science.

As it is with any life-changing decision, this move had financial consequences. Still, leaving Chicago was mostly a good thing. Not only would he have a chance at a more lucrative career, but it also meant slowing down and abandoning an excruciatingly high cost of living. On the other hand, moving to Cincinnati to finish school meant taking on student loans which severely limited his income for two years.

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The cost of maintaining appearances

But we were still dating at the time, and you know what that means. Instead of telling me he couldn’t afford it, my husband (then boyfriend) would take me out to dinner, to the movies, and to see or do basically anything I wanted.

Eventually, however, it caught up to him, and a showdown ensued. At a certain point, I realized that his credit card balance was growing quickly — and it was mostly because of me.

Even though I wasn’t very sophisticated at the time, I knew that a surging credit card balance wasn’t a good thing. And it didn’t take us long to realize that he was paying a rather steep price just to carry a balance in the first place — a whopping annual percentage rate (APR) of 20.99 percent. With an interest rate that high, even carrying his relatively small balance of around $2,000 was fairly devastating. But, what could we do?

Taking control — researching how balance transfer offers work

After talking it through for a while, we decided that the first thing he should do was to stop using the card. So that’s exactly what he did. Unfortunately, that didn’t solve the problem completely. We still had around $2,000 in credit card debt to kill.

So we searched the Internet for ideas and found out that it was possible to transfer the balance from one card to another with more attractive terms. But we needed to know exactly how that worked. Eventually, we found the perfect balance transfer offer — a card with a 0% APR for 14 months with zero balance transfer fees. Here are a few things I learned during the process:

  • Many balance transfer offers include a 0% APR for a limited time. When I started searching for the best balance transfer offer I could find, I stumbled upon a number of options with a 0% APR for a limited time – usually between nine and 16 months.

  • Balance transfer fees can apply. Although the balance transfer offer we pursued was fee-free, almost all balance transfer offers charge a fee between 3% to 5% just to make the transfer. For a $10,000 balance, that can mean paying $300 to $500 up front. If you are saving a bundle on interest, however, that up-front fee can quickly pay for itself.

  • Balance transfer offers are not all created equal. Although the balance transfer offers we looked into all had attractive terms, some were definitely better than others. For example, the length of the 0% APR promotional period varied greatly between offers. When you are in debt, there is a big difference between having 0% APR for six months and 0% APR for 18 months.

  • Many of the best balance transfer offers were only available to those with good or excellent credit. Since balance transfer offers usually offer excellent terms, they are almost always available to individuals with excellent, or at least good, credit.

Time is of the essence

In a lot of ways, we were lucky. Although the vast majority of balance transfer credit card offers charged a fee of 3% to 5%, my husband somehow qualified for a special promotion with no fees involved. After realizing what a great deal this was, we pounced quickly and transferred his $2,000 balance right away.

That meant that, instead of paying a 20.99% APR, he was suddenly paying zero. In other words, every cent he paid during the 0% APR promotional period would go directly toward paying down his balance. We knew we had to take advantage of this opportunity immediately — but how?

How to use a balance transfer to become debt-free

We decided on a two-step approach to eliminate his debt:

  1. The first step involved sticking to cash for a while. After all, it’s a lot harder to pay down credit card debt when you are using credit on a daily basis. We all know how those balances can creep up over time, and giving up credit altogether was the easiest way to make sure that didn’t happen.

  2. To make the most out of the balance transfer while also preserving my husband’s ability to survive on a low income, we came up with a crafty plan to pay off his debt over the span of the entire promotional period. Since he had 0% APR for 14 months, we took his balance ($2,000) and divided it by 14. After rounding up a bit, we ultimately decided on a monthly payment of $150 for 13 months and the balance of what was left at the very last minute.

Is a balance transfer offer right for you?

Although balance transfer offers aren’t for everyone, they can make a whole lot of sense if you are paying an unreasonably high interest rate and have decent credit. In most cases, you can transfer the balance from a high-interest card to one with better terms and lower interest without any hassle other than filling out an application and following through.

The savings for such a move can be huge. If you are carrying a $10,000 balance with a 15% APR, for example, you are easily paying more than $1,500 per year in interest alone. The right balance transfer offer could knock that figure down to zero for a period of six to 16 months. And if you’re able to pay your debt down altogether during that time, you could save a bundle of money and become debt-free all in one fell swoop.

Just remember to factor in any applicable balance transfer fees or annual fees before you pull the trigger. And no matter what, you should also take the time to read through all of your new card’s fine print, terms, and conditions. The savings may still be substantial, but it is important to make an informed decision.

Have you ever taken advantage of a balance transfer offer? How much did you save?

GRS is committed to helping our readers save and achieve their financial goals. Savings interest rates may be low, but that is all the more reason to shop for the best rate. Find the highest savings interest rates and CD rates from Synchrony Bank, Ally Bank, and more.

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