Balance transfers remain one of the greatest ways for people with credit card debt to save money without spending money - that is, without requiring they have any money on hand to apply towards paying down their debt.
The idea is simple: You take balances on credit cards with high interest rates and transfer them to credit cards with low interest rates.
So while you can't lower your principal without paying it down, you can most definitely lower your interest, and in the long run that's usually the bigger chunk.
The best of all balance transfers, perhaps, is to a credit card with a promotional interest rate for balance transfers of 0% for some fixed period (the longer, obviously the better). The downside to this method, and any like it that involve promotional balance transfer offers, is that it requires getting a new credit card.
Oftentimes, when you're trying to get out of debt and improve your credit rating, getting a new credit card is the last thing you need. But if you are eligible for a balance transfer offer that could save you considerably in interest charges, then there are ways to temper the disadvantages.
For one, as you transfer balances to your new card, close out the old cards. One exception to this is, if you're trying to improve your credit score - or maintain a good one - to keep open your oldest line of credit and your credit card with the highest limit. Now, don't use this card very often, and when you do, pay off the balance in full each month. But if you close out all your other zero balance credit cards but this one or two, then you'll be doing your credit score as great a deed as you'll be doing for your wallet.
Another thing to be aware of regarding balance transfer offers is that unless the offer explicitly states in bold print that there is NO BALANCE TRANSFER FEE, there is probably a balance transfer fee (usually 3%). This is a one-time fee and, while a nuisance, does not discount the money-saving benefits of credit card balance transfers.
But even if you can't (or don't want to) apply for a new credit card with a promotional balance transfer rate, you can still save cash by transferring high interest balances to low interest cards. Just be sure to calculate the balance transfer fee and upcoming interest charges into your figures when you decide how much to transfer. You don't want to accidentally go over your limit.
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