# Strategy to save the most on interest

I'm planning on applying for a credit card that offers 0% APR on balance transfers for 15 months and \$0 balance transfer fees. I'm thinking on using this card to pay down some of my student loans.

Now, purely from a mathematical standpoint, I'm thinking that the best strategy to save the most interest, is to continue paying down the student loans and only pay the minimum on the credit card. Keep doing this until the special 0% APR period end date gets close enough but not too close that I would not be able to pay down the entire balance on the credit card by the promotional period end date. Then, I would start paying down the credit card and start only making the minimum payment on the student loans.

Is this right?

• A balance transfer offer is not the same as charging your student loan payment to your newly acquired credit card, and so be sure you understand the fine print correctly. Also, unless the card agreement explicitly calls it out, new charges (e.g. groceries) on the credit card will accrue finance charge from Day One (no 25-day grace period to pay after the statement) because your card will be on "Last statement balance not paid in full" status. Worse, minimum payments will all go to reducing the 0% balance and not towards the new charges (and interest thereupon). So, be careful. Commented Jul 24, 2015 at 21:54
• See this answer for some details on how 0% balance transfer offers work. Commented Jul 24, 2015 at 22:00
• @DilipSarwate I understand all that.
– user19035
Commented Jul 24, 2015 at 22:01
• What is the interest rate on your student loans? What is the amount that you are planning on transferring to the credit card? Commented Jul 24, 2015 at 22:15
• @BenMiller The interest rate on the student loans is 8.25%. I'm planning on transferring as much as I qualify for (\$15,000 max). Why do those numbers matter? The math is the same.
– user19035
Commented Jul 24, 2015 at 22:24

## 1 Answer

Moving \$15,000 from 8.25% to 0% and paying it off in 15 months will save you about \$840 in interest. However, there are a few things to watch out for in order for this scheme to work:

• If you don't pay off all \$15k by the time your 0% promotional rate is done, the interest rate will certainly skyrocket to something higher than the 8.25% you are currently paying. And you won't be able to transfer it back to your student loans. Make sure it is all payed off before then.

• As @DilipSarwate warned in the comments, you don't want to use this credit card for any other purchases until the entire balance transfer is payed off.

For your strategy in paying off the loans, I don't know how much your total debt is or how much you plan on paying per month. You can certainly do what you suggest: let the \$15k sit for a while on the credit card while you pay on the remaining 8.25% student loan, but it is absolutely key that the \$15k debt is completely gone before the credit card rate jumps. If not, then as @keshlam noted in the comments, you'll quickly eat into the savings you are trying to achieve by delaying payment on the transferred debt.