Paying 0% Interest: How Balance Transfers Work—and When They’re Worth It

If you’re juggling credit card debt, you’ve probably seen offers for something called a balance transfer—often with a teaser like “0% interest for 12 months.” It sounds like a financial cheat code, right? But is it too good to be true?

Let’s break down how balance transfers actually work, when they do make sense, and how to avoid the most common traps.

What is a balance transfer, exactly?

A balance transfer is when you move debt from one credit card to another—typically from a card with a high interest rate to one with a low or 0% introductory rate. The goal? To give yourself some breathing room and save money on interest while you pay off what you owe.

For example:

If you owe $3,000 on a card with 25% interest, and you move it to a card offering 0% interest for 12 months, you could save hundreds of dollars—as long as you pay it off before the promo period ends.

How does it work?

Here’s what a typical balance transfer looks like in action:

1. You apply for a new credit card with a balance transfer offer (or use an offer on an existing card).
2. You request to transfer a specific amount of debt (usually up to your credit limit).
3. The new card issuer pays off your old balance.
4. Your debt now lives on the new card—ideally with 0% interest for a set time (usually 6–21 months).

What’s the catch?

Balance transfers can be a smart move—but only if you play your cards right.

Here’s what to watch out for:

• Balance transfer fees

Most credit cards charge a fee of 3–5% of the amount transferred. So moving $3,000 might cost you $90–$150 just to get started.

• 👉 But not all institutions charge this fee. A few credit unions currently offer balance transfer options with no balance transfer fees, including:
  • Chartway Credit Union
  • ELGA Credit Union
  • Community Financial Credit Union
  • Lafayette Federal Credit Union

(As always, double-check terms directly on each credit union’s site before applying.)

• The interest clock

The 0% rate is temporary. Once it expires, your interest rate may jump way up—often above 20% (though the credit unions we mentioned offer much lower rates). If your balance isn’t paid off by then, you could be back where you started.

• Minimum payments still apply

You still need to make monthly payments, even during the promo period. Missing one could cancel your 0% rate early.

• New purchases may not qualify

The 0% interest usually only applies to the transferred balance. New charges on the card might be charged at the regular APR—so don’t use it like a new spending card.

When does a balance transfer make sense?

Balance transfers work best if:

✅ You have good credit (typically 670+)

✅ You can realistically pay off the balance within the promo period

✅ You won’t add new debt to the card

✅ You’re organized enough to stay on top of payments

They can be especially helpful if you’re stuck in a cycle where interest keeps outpacing your ability to pay down your balance.

When not to do it

Think twice if:

❌ You’re just moving debt without changing your habits

❌ You won’t be able to pay it off before the promo ends

❌ You’re tempted to make new purchases on the card

❌ You have a small amount of debt and the balance transfer fee ends up being more than the interest on your current card

A balance transfer isn’t a magic fix—but it can be a smart bridge to a debt-free future if you pair it with a solid plan.

Bottom line

A balance transfer can give you the space you need to make real progress on your debt—without getting crushed by interest. But it’s not a free ride. Look closely at the details:

• How long is the 0% rate?
• What’s the interest rate after that?
• Is there a transfer fee?

And if you want to skip the fees altogether, a credit union might be your best bet.

Still feeling unsure? That’s what Debbie is here for. Whether you’re shifting debt or shifting your mindset, we’ll help you build habits that last—long after the 0% interest runs out.

Meet Debbie 💚

Debbie is your partner in financial freedom. We guide, motivate, and reward you for taking control of your money—whether that means crushing debt or building savings. Our users pay off 3x more debt and save around $100/month on average. Ready to join the movement? Sign up at joindebbie.com and start earning rewards for hitting your money goals.

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