The other day a friend confided that he was worried about his skyrocketing credit card debt.

I asked him, "Have you done a balance transfer?" He just stared at me—then he asked, "What is a 'balance transfer?’"

I learned this money-saving trick from a former boss years ago when I was struggling under the burden of some unexpected out-of-pocket medical care costs. She told me, "Never pay credit card interest. Manage your credit cards or they will manage you." She then proceeded to explain how to do a balance transfer—and I was hooked.

Over the years, I have used balance transfers as needed and am proud to say I have not paid interest on my credit card debt even once in the last decade!

### How to do a balance transfer

Here are the steps to initiate your first balance transfer:

1. Identify the credit card that is generating costly interest on accumulated debt.

2. Gather all your active credit cards together in one place. Identify the cards that currently have a low or zero balance.

3. For each of these cards, call the credit card company (or visit the website) to find out which cards are offering a 0% interest balance transfer. Be SURE you specify 0% interest in your inquiry.

4. Find out how long the promotional period lasts (typically this will be 6 or 12 months).

5. Ask what the maximum amount is that you can transfer to the new card under the 0% interest promotion.

6. Ask what the transfer fee is if you decide to transfer your debt balance to that card. Typically the transfer fee is a few percentage points of whatever the transferred balance will be. If you transfer \$1,000 and the transfer fee is 1%, the fee will be \$10 and will automatically be added to your total transferred balance, making a total debt balance of \$1,010.

7. Do your homework—this money-saving trick only works if you can pay off your transferred balance in full before the 0% interest promotional period ends!

8. Calculate what maximum monthly payment you can afford, times the number of months in the promotional period. For instance, if you can afford to pay \$100 per month, and you get a promotional period of 12 months at 0% interest, you know you should be able to pay off your transferred debt balance of \$1,010 before the promotional period ends.

9. Call the credit card company and initiate the balance transfer. Be sure to keep good notes and track payments so you don't inadvertently get charged more interest when the promotional period runs out.

### Avoid Using Your Card After the Balance Transfer

Once you transfer a balance to a credit card under a 0% balance transfer offer, set that card aside and do not use it again until the balance is paid off in full. This is important because if you do charge additional items to that card during the promotional period, any debt repayments you make will be charged against the newest debt first.

### Demand a Lower Rate

If you cannot find a credit card in your existing collection that is offering a 0% interest balance transfer, try asking your credit card companies to lower your interest rates. Companies won't offer you a lower rate unsolicited, but they do fight every day to keep customers loyal. Research shows that more than half of all customers who request a lower interest rate on a credit card receive it. If you call and the representative you talk to declines to lower your interest rate, don't give up. Call back and ask to speak to a supervisor and mention you are thinking of leaving the company for a competitor. Often this will work where previous efforts have not.

### Transfer Debt to a Card with a Lower APR

Find out if you can transfer the debt from the highest interest rate credit card to a card with a lower APR (annual percentage rate). Even if you are still paying interest on your debt, at least now you are paying a lower rate of interest.

### Do Research

Do research on whether it makes sense to apply for a new credit card in order to gain access to a 0% interest balance transfer. Many times credit card companies will offer a 0% interest balance transfer promotional period to persuade customers to drop competing credit cards.

This is a guest post by Shannon from Houston, TX