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The benefits of a balance transfer credit card is a mystery to many people, which is a shame because it could be the key to dealing with your credit card debt efficiently and cost-effectively.

The catch-22 of credit card debt is that even when you pay off little by little each month, the card’s APR constantly charges additional interest on top of the principal debt. Interest charges will run up to hundreds dollars a month if your debt is in the thousands; see for yourself with the Debt Repayment Calculator. Paying off credit card debt can feel like trying to run a marathon, sprinting 3 steps forward and falling 1 step back.

A balance transfer credit card is the savvy way to reduce credit card debt by moving your credit card debt from your old card to a new credit card with a limited-time grace period of little to no interest on your card’s balance. You pay off faster debt faster and save significant amount of money on interest. Here’s the run-down of what to know:

1. You typically need GOOD to EXCELLENT credit to qualify for a balance transfer credit card.
2. The hard inquiry that comes with applying for a new credit card will immediately ding your credit score a few points. Also, opening a new credit card will change your available credit and your credit utilization rate, which will also impact your credit score. You can get an idea of what kind of damage or boost getting a new credit will have on your credit score by using our Credit Simulator. But the long-term pay-off is that paying down your debt now will have a great positive impact on your credit score.
3. Balance transfer cards offer 0% APR intro offer on balance transfers for anywhere from 6 to 18 months. Look for a balance transfer card that offers 0% APR of at least 12 months or more to maximize your savings potential.
4. You can consolidate debt from multiple cards onto one balance transfer card.
5. Always read the fine print on the application requirements. For many balance transfer cards, one late payment permanently revokes your 0% APR intro offer. Know the eligibility and limits of the card.
6. Cards often offer 0% APR on purchases along with the 0% intro APR balance transfer, but avoid charging more purchases to this new credit card. You will incur more debt, which totally defeats the purpose of getting the balance transfer card to reduce your current debt.
7. Watch out for the balance transfer fee, which is a percentage of the credit card amount you are transferring. Balance transfer fees have increased to a standard 5% fee, but there is typically a cap of $75-$90. If you’re lucky, you can find a card with a 3% balance transfer fee (the previous standard fee) or, even rarer, a card with no balance transfer fee.
8. Once the 0% intro period is over, the interest rate will reset to the standard APR, which is often steep for balance transfer cards. Once the standard APR kicks in, plan to have paid off your debt it full by then or you’ll be paying high interest on your leftover balance.

One of our recommended favorites is the Citi Platinum Select MasterCard, which offers 0% intro APR on purchases and balance transfers for up to 18 months if you qualify.

Now that you are in the know about the great benefits of a balance transfer card, now is your chance to be a savvy consumer and ditch that credit card debt once and for all.

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