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Some credit cards can actually be powerful tools for paying off your debts — if you know how to use them

Tywin Lannister Game of Thrones
Tywin Lannister Game of Thrones

(You always want to pay your debts. A balance transfer could help.HBO)

America's credit card debt problems are creeping back to pre-recession levels. The country has accumulated nearly $1 trillion in debt on plastic, and the average household is carrying a balance of nearly $8,400.

If you're one of the millions of Americans struggling with credit card debt, the last thing you need is the temptation of yet another card, right? Actually, the right credit card could be your ticket to paying off that debt and saving a lot of money on interest in the process.

Nearly every large card issuer now offers "balance transfer" services, and the promotions for them have rarely been better. A balance transfer is a pretty simple concept. Essentially, it's when one credit card company offers to take your debt from a competing company for a small fee, enticing you with a much lower interest rate than you're currently paying — at least initially.

Right now, these promo interest rates are very enticing indeed. In a recent survey of 100 credit cards, CreditCards.com found that 89 offered a balance transfer option, and 38 offered a teaser interest rate of 0%. A zero-percent rate can be a godsend if you're currently languishing with traditional credit card rates and a high balance.

The most common fee charged for the transfer right now is 3% of the balance. So if you're transferring $1,000, you'll pay $30 for that luxury. If you're one of the households with $8,000 in debt, that fee is $240.

But if you're responsible and serious about paying off your debt, that fee could be worth it. Citi's Diamond Preferred card currently offers one of the best deals out there: 21 months with a 0% interest rate, for a 3% fee. Most cards only give you 12 to 15 months at the interest-free rate.

So, on that $8,000 debt, let's assume you were paying 17% in interest before the transfer. After transferring, if you pay off $393 each month, you'll have eliminated the balance during the introductory rate period, saving over $3,600, including the $240 transfer fee.

Those savings escalate depending on how high your original interest rate was. If you were paying 22% APR on a store credit card, you'd be saving $6,300 in the same scenario.

citi diamond preferred credit card
citi diamond preferred credit card

(Citi's Diamond Preferred card currently offers one of the best deals out there on balance transfers.Citi)

If you're not responsible, though, you're better off just forgetting the whole proposition. After the intro rate expires, you'll start paying a more traditional rate (the precise figure will depend largely on your credit score, but for the Citi card the range is 12.49% to 22.49%). So if you haven't made a dent in your balance or, even worse, have accrued more debt, you're not going to fare well.

"Balance transfer cards are great inasmuch as the people who use them are taking advantage of the zero-interest grace period to get out of the debt and not simply to tread water," John Ulzheimer, a 25-year veteran of the credit industry who spent years at credit bureaus Equifax and FICO, told Business Insider. "They're also dangerous, because if you don't pay off your balance before the zero-interest grace period expires, you may find yourself paying interest retroactive to the day you opened the card. And, to the extent your balance transfer card also allows for no interest on new purchases (which a lot of them do) you have to be careful not to stack new debt on top of existing debt."

You also have to watch out for fees. As tempting as Citi's Diamond Preferred offer is, CreditCards.com notes that it charges higher penalties, including a variable rate of up to 29.99%, for people who make late payments.

But, if you're one of the growing number of Americans feeling financially crippled by credit card debt, a balance transfer could be just the reprieve you need to get back on track to financial wellness.

"Card debt is nearing $1 trillion. Rates are rising. Delinquencies are finally starting to rise. Zero percent balance transfer introductory offers are the longest they've ever been. Add it all up, and it's a great, great time to shop for balance transfer cards," Matt Schulz, a senior analyst at CreditCards.com, told Business Insider. "People just need to beware of the fees, post-introductory rates, and other details associated with the cards."

If you're interested in pursuing a balance transfer, check out CreditCards.com's ranking of the best cards, and play around with its balance transfer calculator to see how the math adds up for you. Just note that CreditCards.com makes money from card issuers when they refer readers.

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