Make this smart move with your credit card, and you could be on the way to big savings.
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Americans face major financial challenges, with many people deeply in debt and even more finding it difficult to set money aside for long-term saving goals like retirement. Too many people find themselves stuck without any apparent way out -- especially if they've let credit cards get the better of them.
Yet there's something that you can try in order to improve your financial life. You'll probably find it surprisingly simple. It won't work for everyone, but when it does, it could save you $100 per month or more -- and that's money you can use toward paying down debt, saving for a rainy day, or finally getting a head start on all the financial goals you've set for yourself.
The high cost of carrying a balance
Credit cards are notorious for wreaking financial havoc on their cardholders. A combination of high outstanding balances and expensive finance charges can be costly, and it's dangerous for anyone to use credit cards if they aren't positive that they can pay off their balance in full each month.
Once you fall into the trap of carrying credit card debt forward month to month, it's hard to get out. The costs are shocking, as you can see from the following example:
| If You Have $5,000 in Credit Card Debt at This Interest Rate | Then It'll Cost You This Much in Interest Each Month |
| 8% | $33 |
| 10% | $42 |
| 15% | $63 |
| 20% | $83 |
| 25% | $104 |
Calculations by author.
Carry a bigger balance, and the monthly costs of credit card debt get an even larger and more difficult to overcome.
The surprisingly simple solution
Fortunately, there's a way out for cardholders. Because the card industry is so competitive right now, you can often find lucrative offers to entice you to switch cards and go with a competing issuer. One of the most common ways that card companies try to poach each other's customers is through balance transfer promotions. Under these promotions, your new card company offers you an introductory 0% rate on your transferred balance for a certain length of time, often a year or more.
Taking advantage of a balance transfer promotion is pretty easy:
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Apply for a card that offers a promotion for balance transfers.
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Find out whether you're approved, and if so, how much you're authorized to transfer.
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Give your new card issuer the information about the old card whose balance you want to transfer.
Typically, that's it. Your new card company takes care of the rest, and you're all set.