When used effectively, balance transfers can help people manage their debts and other aspects of their finances, as well as avoid paying high interest charges on credit card accounts. In essence, a balance transfer is just what it sounds like - moving an outstanding balance from one card or account to another. This can help to consolidate debt and save money on interest payments, though it's important to take note of any fees charged for balance transfers which could mean you end up paying more.

Most credit card providers offer balance transfer options on cards, but the fees and interest rates can vary substantially. The most attractive offers for many people are zero per cent balance transfers, which make it more cost-effective to transfer money between accounts when needed without being penalised with a high APR. Your credit score may play some part in determining whether you are able to benefit from the best balance transfer deals, and conversely opening a number of credit card accounts and keeping up with all your repayments through the help of balance transfers could improve your credit score.

The amount of money you can potentially save using balance transfers is significant. If you had one credit card with an interest rate of 29 per cent, for example, and you transfer your existing balance to a new card offering 19 per cent interest, this will amount to a saving of 10 per cent APR over the course of the year - which could amount to hundreds of pounds, depending on your situation. You should also consider how long you will be likely to use the balance transfer function of your credit card, as this could make it preferable to look for a low rate balance transfer card for long term savings, rather than a zero per cent balance transfer card with a limited introductory period. Credit cards that offer free balance transfers for periods up to 23 months or even longer will often revert to a higher APR thereafter.

You can make a balance transfer work for you with some strategic financial planning, but you will need to account for all factors that affect the total amount you pay in the long run - including balance transfer fees and interest rates. Speak to your credit card provider to find out more about the benefits of balance transfers.

The author of this article is a part of a digital blogging team who work with brands like Barclaycard. The content contained in this article is for information purposes only and should not be used to make any financial decisions.