What can you save in 21 months on a 0% APR balance transfer card?

Monday, December 27th, 2010

If you are new to the concept of balance transfers, a 0% APR credit card, with an introductory period of 21 months might not sound a big deal for you. But in reality, it is the best balance transfer deal that has been offered in the last 6 months, allowing you to save a lot on your interest, and helps you getting out of debt much faster. Normally, most credit card balance transfer offers have an introductory period that last about 12 months. In the middle of the credit crisis, though, credit card companies reduced this term to just 6 months. However, in 2010, this time period is steadily increasing, first to touch 15 months and later 18 months. But none of them are anything in comparison to the 21 months introductory period, which is 3 months short of 2 years, without any interest on your credit card.

If you have 3000 dollars of credit card balance, with a decent interest rate of 15%, and you make minimum payments, in the next 21 months, you would be paying around 510 dollars on interest charges. However, you would still find yourself in debt which is about 2252 dollars. However, if you take a balance transfer to the 21 month 0% APR card, you will owe the lender only 1832 dollars when the introductory period expires. Even if you pay a balance transfer fee of 90 dollars, you would save about 420 dollars. If you pay twice the minimum payment every month, you would bring down the credit card debt to just over 1000 dollars. But a balance transfer will reduce your card debt to as low as 630 dollars, once again saving you 400 dollars. Lastly, if you can manage your finances well and pay back 30 dollars extra over the double of minimum monthly payments, then you would out of credit card debt in the 21 months time period.

Two cards, the Citi Diamond Preferred Card and the Citi Platinum Select Card are offering 0% balance transfers for 21 months time period. These are cards available to customers with good credit and have a 3% balance transfer fees. The fee is on the lower side if one compares it to various other cards that offer smaller periods but charge 4-5% balance transfer fees. Another catch in this card though is that you cannot transfer balances from a Citi card.

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