There is a simple “trick” to saving over $600. It only takes about an hour of work. All you need is a decent credit score and some high interest debt you want to eliminate. 

On top of that we’ll also show you a few other tricks you can use with a 0% APR credit card to get ahead.

Above I say you could save $600 but the actual amount will vary. It could be way more depending on how much debt you are carrying and what your interest rate is. The example I’m using is a person with $3,000 dollars on a credit card at 20% interest, and only looking at the first year of interest. If you have more debt, or a higher interest rate, the savings only goes up from there.

If you have high-interest debt that is getting away from you it might make sense to get a balance transfer credit card. These credit cards have low interest rates and oftentimes a 0% APR which can be a helpful tool in managing your debt. 

A 0% APR credit card is a card where you are not charged interest. APR stands for annual percentage rate. 0% is great for you and bad for the bank, because they are basically letting you use their money for free. They are betting on the fact they will make money on you in other ways (fees, penalties, other loans). Or they are just trying to steal business from their competitors. For a 0% APR card to work in your favor, you have to make sure to pay the minimums (or interest penalties and fees kick in). Watch out for hidden fees such as annual membership chargers or balance transfer fees. Typically 0% APR cards will switch to a higher rate after 12 to 18 months. Those terms will be stated when you sign up. So unfortunately the 0% aspect doesn’t last forever but it can give your budget a nice boost. 

Here are several ways to capitalize on a 0% APR credit card.
 

Consolidate Other High-Interest Credit Cards

Credit cards can have interest rates of 25% or more. This means that a month or two of overspending can set you back long-term. If you have other credit cards with high interest rates and struggle to pay off both the balance and interest, it might make sense to get a balance transfer credit card.

When someone takes out a balance transfer credit card, they will have the opportunity to transfer their existing balances from other cards onto their new card. The new card will have 0% APR for the first several months, often up to a year and a half. This is a great strategy because at that point any transferred debt stops accruing interest. That saves money and allows you to pay down the balance on the card more quickly.

Consider a credit card at 20% interest with a $3,000 balance. That amounts to about $600 in interest in the first year. If only minimum payments are made the interest adds up to more than double the original balance!

Considering that it only takes an hour or so to open a new account and coordinate the transfers. That means your effectively hourly wage for making a move like that would be way up there. Most people don’t get many chances in life to earn $600 / hour, but this is one way to do it!

For those interested in mastering their budget and becoming financially free the best thing to do is to avoid spending with the old cards (or close them entirely). Then avoid carrying a balance on the new card once the 0% APR period is over.
 

Make a Large Purchase

If you have a large purchase coming up that you do not have the cash for, you might want to consider using a 0% APR credit card. A balance transfer credit card will allow you to make a big purchase then pay it off over several months without having to pay interest.

For example, if you’re moving and need to purchase furniture, you might not have the cash available to buy the furniture you need. If that’s the case, you could take out a 0% APR credit card that does not charge interest for the first 12 months. Then, you can purchase your furniture and adjust your budget to make regular payments on your purchase for a year without having to pay any additional interest or fees.
 

Pay Down High-Interest Loans

Similar to consolidating high-interest credit cards, you can use a balance transfer credit card to consolidate high interest debt.Check out our loan consolidation calculator to find out how much you could save. 

It is important to note that transferring debt to a 0% APR credit card only works if you stop spending on your other credit cards or lines of credit and focus on repaying your debts.

If you have high-interest personal loans, other credit cards, or other high-interest loans, you can transfer your debts to a balance transfer credit card, typically with a fee of 3-5% upfront. Then, you’ll have several months to make payments on the balance of your credit cards without gaining any additional interest. 

Although there is an upfront fee, it is typically significantly smaller than the monthly interest payments accrued on high-interest debt.

Additionally, consolidating your debt makes it easier to manage payments. Instead of making multiple payments each month, you will have a single payment to make each month. 

Additionally, you can pay as much or as little as you choose, and your balance will not grow because of the 0% APR.

Just be aware that some of the 0% APR deals have terms where the rate goes WAY UP after an introductory period. So if you are going to refinance debt using this strategy be careful not to get sucked into what is ultimately a higher interest rate.
 

Use it as an Emergency Fund

Some people choose to take out a balance transfer credit card to use as an emergency fund. Most financial advisors recommend having at least three months of expenses in savings. However, saving can be tough, especially if you are young, have debt payments to make, or have a low income.

If you experience a sudden expense such as an unexpected hospital visit or need to replace an appliance, a 0% APR credit card can function as an emergency fund. You can either keep a credit card on-hand or take out a credit card if you foresee a sudden expense. Then, you can pay off any emergency expenses interest-free.
 

The Bottom Line

Credit cards can be a great way to earn rewards on your purchases, save time, and eliminate the need to carry cash. However, they can also make it easy to overspend, especially if you are used to spending in cash. Paying off a credit card can take months or years, depending on your interest rates.

0% APR credit cards, also known as balance transfer credit cards, can be a powerful tool to help people pay off debt or keep extra money on-hand in case of an emergency. It is crucial that if you decide to consolidate debt, you do not continue spending on your other lines of credit. Instead, focus on the consolidated balance transfer credit card and paying off the balance as quickly as possible. Paying down your new credit card balance will help you save money on interest and could even help you raise your credit score.