In this study a new nondestructive testing (NDT) method called transient eddy current oscillations (TECO) is used to detect a change in the thickness of stainless steel plates. The TECO method uses a probe that includes a capacitor and an induction coil, which are connected in parallel, to generate a transient oscillatory regime in the excitation current to induce eddy currents in the test object. A Hall-effect sensor is used to measure the resultant magnetic field in the vicinity of the test material. The experimental results were analyzed to conclude about the thickness variation of the test object using the absolute integral value of the decay of oscillations that are obtained from the probe at different thicknesses of test material in the time domain and their frequency was calculated using fast Fourier transform (FFT). If there is a decrease in the thickness of the test specimen, experimental data shows an increase in the integral value of the sensor output signal and a decrease in the frequency. A differential FFT method is being proposed in this paper to separate any unwanted lift-off variation from the local wall thinning. In fact, with the thickness change in specimen, the differential spectrum show two differential FFT amplitude peaks in which one is positive and other is negative. However, if there is a change in lift-off on the reference thickness of specimen, the differential FFT shows three differential FFT amplitude peaks in which two peaks appeared in the positive side of the differential FFT. This enables an easy identification of any lift-off change, which is very useful in real time applications.