If you are struggling with credit card debt that never seems to get any smaller, you’re definitely not alone. The average American household now has more than $16,000 in credit card debt with an average interest rate of about 15%. With only minimum payments, it would take more than 31 years to pay off the balance with a total cost of almost $35,500 (principal balance plus interest).

A balance transfer can be a solution to help you pay down your balance faster and even avoid paying any interest on the debt while you do so. Here’s how a balance transfer works.

What is a Balance Transfer Card?
A balance transfer credit card is a card that offers a very low interest rate or a 0% APR for an introductory period. Depending on the card, you can get a balance transfer offer with 0% interest for up to 21 months. Some credit cards instead offer an ongoing low interest rate that may be 10% to 20% lower than what you are paying now.

What to Look for in a Balance Transfer Offer
Not all balance transfer offers are equal. There are a few things to look for when selecting a credit card:

  • Is there an annual fee? This does not need to be a deal-breaker, but be sure you factor it into your calculations to determine if transferring your balance will save you money.
  • What is the balance transfer fee? Most credit cards charge 3-4% of the balance you are going to transfer, which is added to your new balance. That means you may pay a fee of $300 to $400 for every $10,000 you transfer. There are some credit cards that do not charge a balance transfer fee, however.
  • Is there a limit to how much you can transfer? Many card issuers limit how much you can transfer to your new card, regardless of the credit limit. This limit is usually $15,000.

Is a Balance Transfer Going to Save You Money?
Don’t assume you will necessarily save money just because the new credit card has a lower interest rate. The annual fee and balance transfer fee (if any) should be factored into your decision. If the credit card has an introductory offer, make sure you will still save money when the regular interest rate takes effect if you can’t pay off the balance before then. A balance transfer calculator is a helpful tool to help you compare what you will pay with your current card versus the balance transfer card during a specified time period.

As long as you consider all of the costs, a balance transfer can help you save thousands and actually eliminate credit card interest completely while you work toward paying off the debt for good.