You probably get some balance transfer credit card offers in the mail. These are credit cards with low APRs - even zero percent - on balance transfers. You might wonder how they can afford to do that. It’s basically giving away free loans.

You needn’t lose any sleep about the credit card companies. They know what they’re doing. You apply for credit cards wanting the zero percent interest, but the interest rate on new purchases is much higher than zero. And sometimes these credit cards require you to make new purchases every month, to keep you from getting a free ride.

Despite the credit card companies’ efforts, you can still take advantage of their offers of zero percent interest and come out ahead. It’s an easy plan that requires just a little foresight on your part, and a second credit card with low APR.

First let’s talk about the zero-percent-interest deal. What’s their strategy here? The idea, as spelled out in the credit card application, is that you move your existing debt from another credit card over to this one, and for a particular length of time — usually six months or a year — no interest is charged on that debt. In the meantime, any new purchases you make with this card DO have interest applied to them - and it’s usually not a low rate, either.

The problem is, when you make your payments every month, everything goes toward the debt with the low rate - the zero-percent stuff. Those new purchases you’re making in the meantime? NONE of your payment goes toward that, not until you’ve entirely paid off the zero-percent balance. That could be months, even years, and you’re racking up interest charges all the while. A lot of consumers don’t realize that this is how it works when they read the credit card application, and they get caught with ghastly interest payments.

So how do you fight this situation? There are a couple ways. One would be to not make any new purchases on the zero-percent card. That can be difficult, though, especially if it’s your only credit card. Also, as mentioned, some of these zero-percent credit cards require you to buy SOMETHING new with it every month. (If that’s the case, you can do as they wish, and spent absolutely the minimum amount allowable. In some cases, they don’t care how little you spend, as long as you spend something — so go to the grocery store and buy a candy bar with the credit card, and you’re done!)

Another idea is to use two different credit cards. One is the zero-percent-interest card; the other is a credit card with low APR or some kind of attractive rewards program. Credit cards with no annual fee are a must here.

What you do first is find a good balance transfer credit card offer. If you get credit card offers that charge a fee for making the balance transfer, or that have an annual fee, forget them. There are plenty of zero-percent credit cards with no annual fee and no charge for doing the balance transfer. Compare credit card offers and find one with a lengthy period of zero-percent time. It could be as much as 15 months.

Then, work out a plan for yourself in which you pay off that zero-percent balance. The goal is to pay it off before the zero-percent period ends, though if you can’t manage that, it may be possible to transfer it to another zero-percent credit card when your grace period is over.

Next, you get a second credit card — or just keep the one you’ve got, the one you’re transferring all your debt away from. If it’s a credit card with low APR, keep it. You’ll have a clean slate once you’ve transferred your balance off of it, and now you can use it wisely for purchases and emergencies.

What you’re doing here, basically, is creating a program of debt-management that you can live on. You have a regular card (with low interest) for the sorts of things you normally need a credit card for, and you have a zero-percent card for the big pile of pre-existing debt. You don’t use that zero-percent card for anything else (unless the credit card company requires it), and that money is paid off with no interest charges.

The only problem, of course, is that you have to stick to the plan. You might be tempted to make new purchases on the zero-percent card, since you’ll probably still have credit left before hitting your limit. And once you’ve cleared all the debt off your current credit card, you might be tempted to start spending again. But if you can adhere to the plan as outlined here, you can pay off your balance without being overwhelmed with interest charges.

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