If you read yesterday’s article about the traps balance transfer cards have, then you should be well aware that in order to take advantage of these cards you need to be extremely careful.  However, if you are organized and willing, you can pay off some old debts.

Not only can you pay off debt with these cards, but you can also profit if you’re in a situation where you have no high-interest debt. What follows is a step-by-step guide for those looking to pay off high debt with 0% APR balance transfer cards and those looking to take advantage of the system to get a little bit of extra cash.

Getting the Money:

Once you’ve received and activated your new 0% APR balance transfer card, you need to be able to either receive that money as a cheque or to transfer it to a current high-rate credit card. The easiest way to do this is to call the credit card issuer and request a balance transfer cheque and then deposit it in your bank account. Then either use that money to pay your high-interest credit card bill or put it in a high yield savings account to profit.

Some companies don’t issue balance transfer cheques however, which makes this next part slightly more complicated: you’ll need a second credit card, with no balance. Request a balance transfer from the new 0% APR card to your existing card with no balance, and then request a credit balance refund from the existing card (as you will now have a credit on the account). If that card is from a physical bank (such as TD, CIBC, Chase, etc) you can always go into the branch and they can give you the money on the spot or just transfer it into your chequing account.

Profiting (or paying off debt):

The safest way to profit from balance transfer cards is simply to stick the money in a high yield savings account.  All you need to do is stick the money in the account and remember to have the money available to make the minimum payments. Personally, I would recommend having minimum payment money available in your chequing account and budgeting that cost in rather than taking money out of the high yield savings account every month. It takes ING Direct up to 5 days to put money into my regular bank account after I’ve requested it: by knowing you have enough money in your savings account to pay the minimum payments in time you don’t have to worry and you don’t have to withdraw your money up to a week early to make sure you can get that money in time. To be on the safe side, I would also pay the minimum 48 to 72 hours ahead of when it’s actually due, as that’s how long it can take for electronic bill payments to be processed.

If you’re using your new card to pay off debt, the strategy to use is more or less the same, except you’re transferring your balance to a credit card (or HELOC, or car loan, etc) instead of a high yield savings account. Again, make sure you have the funds to pay the minimum immediately available, and take care to pay a few days in advance to avoid technical glitches resulting in your interest rate reverting back to the default.

If you have a 0% balance transfer card with a $5000 limit and put it in a savings account at 4%, you will make $200 over one year. It’s not much, but considering it takes very little effort to make that kind of money, accumulating cards and continuously doing this can result in a good amount of extra cash. As for debts, you can save yourself a year’s interest at 20% on your debt which can make a huge difference to your financial lifestyle.

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