Credit cards with strong balance transfer offers can help cardholders with high-interest rates pay down their credit card debt faster and more affordably. In theory, it’s a simple concept: you simply move your existing credit card debt to a new card with a lower interest rate, with the intention of paying down your debt quicker.

But how does a balance transfer actually work, and how can it save you money? What should you look for in a balance transfer credit card, and what’s the best way to use it to eliminate your credit card debt? Here’s what you need to know.

How Credit Card Balance Transfers Work

A credit card balance transfer occurs when you move all or part of an existing credit card balance onto another credit card. Some credit cards offer special promotional interest rates as low as 0% on balance transfers to new customers.

You will pay the promotional interest rate on any balance transfers you make to your new card for as long as the promotion lasts. For example, a card with 0% APR on balance transfers for twelve months will allow you to pay down your transfer, interest-free, for a full year.

If you’re having trouble paying a credit card balance with a higher interest rate, a balance transfer to a card with a lower APR can help you pay down your debt quicker by reducing the amount of interest you pay.

To complete the transaction, all you need is to open a card with a low-interest balance transfer offer and transfer your balance to the new card.

Choosing the Right Balance Transfer Card

The state of your credit score and credit report will dictate what credit cards you can qualify for – the best cards are reserved for those with good or excellent credit. However, if you can, look for balance transfer cards with the following:

  • 0% introductory annual percentage rate: if you can, get a card with an introductory 0% balance transfer period – for a limited time, your balance transfer will be completely interest-free. If you can’t qualify for a card with 0% APR, you still might be able to access a card with a much lower intro APR, which can still save a lot of money in the long run.
  • Low balance transfer fees: many credit cards charge 3% to 5% of the balance transfer amount as a fee to move the balance onto your new card, but some cards offer free transfers for a limited time. Look for cards with lower (or nonexistent) balance transfer fees.
  • Sufficient promotional periods: remember, the goal is to pay off your balance transfer within the promotional period, which can range from a few months to over a year depending on the card. If you don’t pay your balance off in time, the regular interest rate will kick in on any balance that remains. Look for a card that gives you enough time to pay down most, if not all, of your balance.
  • Avoid annual fees: annual fees are automatically added to your balance, so you may want to avoid cards with annual fees.

Before you apply for a card, check the APR that kicks in after the 0% intro period. If it’s higher than the APR you’re paying on your current card, you should look for a better option – if you don’t manage to pay off your transfer before the interest kicks in, you’ll be slapped with a higher APR.

How to Use a Balance Transfer Credit Card

You should transfer your balance as soon as your card is open. This will ensure you have as much time as possible to take advantage of the introductory APR period. If your card offers free balances for a limited time only, transferring your balance immediately will help you avoid fees.

Make sure you’re budgeting to pay your balance off in full by the time the intro period expires. At minimum, you should be making a monthly payment that will bring your balance transfer amount to zero by the time the regular interest kicks in.

You should also try to avoid using the card for everyday spending, especially if you’re having trouble managing your finances. Using your card for spending can cause your balance to balloon, even if the 0% APR applies to purchases as well. If you’re focused on reducing debt, you should limit or eliminate spending on the card until the balance reaches zero.