When you want to reduce debt by using a new balance transfer credit card, this is a great way to enjoy 0% interest (or low interest) for up to a year. In order to get the best deal out of it, however, there are several things that need to take place.
When choosing your credit card, it is essential that you get one that will allow you to transfer the debt with either no charge, or the smallest possible charge. Some balance transfer credit cards will charge you up to 4% of the debt being transferred, which only adds considerably to your debt. Avoid it, if possible.
Another essential is to not put any new charges on the credit card. Even if you pay the full amount of the new charges each month, you will still be paying the interest on the amount of your purchases. Payments always go toward reducing old debt first, and interest will still be accumulating on your new purchases. This will not help much toward debt reduction.
Each month, says Bills.com, you want to pay what would have been the minimum payment. You figure this out by adding up all the minimum amounts on the separate credit card bills, and then pay at least that much each month. Of course, the more you reduce debt each month by paying extra, the sooner you can get out of debt.