Credit card balance transfers offer a number of benefits to credit card holders.

Perhaps the most important is the ability to lower your credit card’s interest rate.

Most credit cards have an APR somewhere in the teens or above 20%, so if you carry a balance each month, you’re likely throwing away loads of cash via finance charges.

To avoid such losses, you can move your high APR credit card balances via a 0% APR balance transfer or a low fixed rate life of the balance transfer.

Either option will save you serious money, even factoring in any balance transfer fees.

Let’s look at an example:

Current credit card balance: $5,000
Current APR: 19.99%
Balance transfer offer: 0% APR for 12 months, 12.99% thereafter
Balance transfer fee: 3%

In the above scenario, you’d be paying roughly $1,000 annually if finance charges if you continued to carry that $5,000 balance (I’m using simple math.)

If you decided to accept the credit card balance transfer offer at 0% APR, you’d pay $150 in balance transfer fees, pushing your balance to $5,150.

However, you wouldn’t be subject to any finance charges for a full year, so you’d save a considerable amount of money by executing the credit card balance transfer.

This is clearly the biggest benefit of a balance transfer. Other benefits include consolidating debt so it can be more easily managed.

For some reason, consumers tackle debt better when it’s all in one place. Additionally, if the balance isn’t growing (thanks to the 0% APR), you may have a greater motivation to finally pay it off.

Do a little math to see if a balance transfer is a good idea for your unique situation.

Balance Transfer Benefits

- Lower APR (or even 0% APR)
- Lower monthly payment
- Fewer finance charges (or none for a certain period)
- One single payment (if consolidating credit cards)
- Reduced debt
- Money saved!

Read more: Balance transfer problems.