Best Balance Transfer Credit Cards

If you’re struggling to tame your bloated credit card balances, the right balance transfer card could help you save money on interest and shed your debt more quickly. ust pay close attention to terms and balance transfer fees before applying, and remember that balance transfer credit cards generally require a good to excellent credit rating for approval.

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Best Balance Transfer Credit Cards (6)

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What is a balance transfer credit card?

A balance transfer is where part or all of the debit balance (or debt) you owe to another lender is transferred from one credit or store card to another, usually to save on interest repayments.

A balance transfer credit card can be a good way to keep track of your balance and payments with everything in one place.

If you’ve recently compared credit cards and discovered one that charges you less interest, transferring debt from one credit card to the other could save you money. That’s the main benefit of a balance transfer.

By reducing the overall cost of what you owe, a credit card balance transfer could help you pay off your outstanding balance sooner, and even reduce your outgoings. Transferring high interest balances to a credit card which features a promotional offer or lower rate could save you money on interest repayments.

How do balance transfer credit cards work?

By transferring high interest balances to a credit card which features a promotional offer or lower rate, you could save on interest repayments, although remember that handling fees might apply to any transfers you make.

Credit card providers typically promote interest-free periods on their card offers, which could help you save even more and pay off your balance faster – as long as you can pay it off during the initial interest-free period.

Is a balance transfer credit card right for you?

Balance transfer credit cards can potentially save you a lot of money and help get you out of credit card debt. If you're carrying a balance on almost any account with an interest rate, you may be able to transfer some or all of it to a credit card and pay it off at 0% APR.

Say you have a $5,000 balance on a card with an APR of 20%. If you make a $300 payment every month, it will take 20 months to pay off. And you'll end up having to pay over $900 in interest charges.

A balance transfer card provides a better way to pay the debt off. Transfer that $5,000 to a card with a 0% introductory balance transfer interest rate. Then it will only take 17 months to pay off, making $300 monthly payments. You'll save over $900 by avoiding the interest charges, and the debt will be cleared up more quickly which is good for your credit.

This is basically like paying one credit card off using a different card.

When considering a card's offer, look at how many months at 0% APR you'll get. Divide your total debt by that number, and that will give you the monthly payment you'll need to make. If you have a $1,000 balance and 10 months to pay it off, for example, you'll need to make monthly payments of $100 to pay it off in time. We typically recommend aiming to pay off the debt one month early, just to be safe.

Are you carrying a balance on a credit card with an interest rate over 0%? If so, even if you're using a card with a lower-than-average interest rate, you should consider moving it to a card with a 0% APR to save money and improve your credit. If you have installment loans that you're thinking about transferring, this may not be necessary because they tend to have low interest rates and don't hurt your credit very much.

Balance transfers can be a great tactic in your fight to reduce debt. Whether you use the snowball method or the avalanche method, it's always a good idea to try to reduce the amount of interest you end up paying.

Consider a card with a balance transfer offer if you:

  • have credit card debt at an APR above 0%, which you won't be able to pay off within the next few months
  • have a plan to pay off the debt without accumulating more debt on a different card
  • don't have major negative items on your credit reports (since you may have trouble getting approved for a new card)
  • don't mind the impact the new account will have on the account age of your credit scores (generally a small impact, and it may be worth the hit to get out of debt sooner)

Selection criteria: what makes a great balance transfer credit card?

When considering a balance transfer offer, look at these three features:

  • The balance transfer interest rate, or APR: get one with that's lower than what you have now
  • The time period for which the APR will last: longer is better
  • The balance transfer fee: lower is better

The balance transfer APR will be separate from the purchase APR. In many cases they'll be the same rate, but not always. A 0% APR is the best you can get for balance transfers, so look for these offers. Many credit cards allow balance transfers, but they aren't always at zero interest. You'll want to choose a 0% offer to save the most money.

The balance transfer APR period is the amount of time you'll have to pay off the balance at the specified APR. Longer is better, of course, because you'll have more time to pay it off.

The balance transfer fee is the fee you'll be charged for making the transfer. Lower is better, though most cards charge a fee of around 3%.

Sometimes you'll get a balance transfer offer for a credit card that you already have. For example, our editor's BankAmericard Cash Rewards (Review) recently gave him a balance transfer offer of 0% for 12 months or 1.99% for 15 months. There was a 3% transfer fee for each offer. Card issuers might do this occasionally to encourage you to carry a balance on one of their cards again.

You won't be able to transfer a balance between two cards from the same issuer. So you can't transfer from one Amex card to another, for example, or one Discover card to another. You'll have to transfer from a different credit card issuer or bank.

This makes balance transfer offers pretty easy to assess, because you only have a few factors to look at. Just make sure the APR you'll get is lower than what you currently have (preferably 0%). And go for the longest APR period you can find, with the lowest possible fee.

Lucky for you, we've rounded up the cards with the best balance transfer offers available today. You could use any of them to start making a dent in your credit card debt.

How to make the most of your balance transfer credit card?

Balance transfer cards can be an excellent savings tool, but they also tend to carry high APRs, which can be a pitfall if you aren’t diligent in paying down your balance. Here are a few tips to keep you from digging yourself into more debt:

Figure out the best amount to transfer

Usually it makes sense to transfer as much of your debt as possible onto a 0-percent card to minimize your interest payments – but not always. Balance transfer cards usually carry higher-than-average APRs and – if you can’t repay the balance before the introductory period – it could potentially cost you more in interest rates and fees than if you leave the balance where it is. If your current account has a lower interest rate, you should do some math to figure out whether transferring all of your balance or just a portion of it will cost less.

Create a plan to pay off your balance

You’re not off the hook once you’ve transferred your balance – you need to pay it off in a timely manner so you don’t end up racking up a ton of interest on it. Have a plan in place that includes monthly installment payments before you do the transfer.

Pay your bill on time

Be sure to send your payment by the due date to avoid penalty fees. In fact, check the card’s terms and conditions, because making a payment even a day late may result in you losing your 0-percent introductory rate. Set up an automatic payment through your bank and schedule it a few days before your due date to be on the safe side.

Try to pay it off before the introductory period expires

You should try to pay off your balance before the regular APR kicks in. However, you should also take into account balances on other cards. You may want to focus on paying down accounts with higher interest rates first, and then make larger payments toward your 0-percent card once you’ve paid off your other accounts.

Avoid making new purchases on your card

Don’t get yourself in more debt. Incurring new debt could undermine your ability to repay your balance transfer before the introductory period expires, and -- unless your new card includes a 0-percent introductory period for new purchases -- you will immediately start incurring interest on that new debt. Put your new card to the side until you’ve finished paying it off.

Keep your old card open

Don’t close down your old account once you’ve transferred your balance from it, especially if you’ve had it for a long time. Doing so could significantly lower your credit score, by lowering the average age of your accounts and raising your credit utilization ratio. However, you don't want to incur new debt either. Instead, put a small charge on the old card and pay it off in full each month to keep the account active.

Evaluate your spending habits

Consider how you accumulated a large balance and steps you need to modify your spending habits. Perhaps the balance was the result of an emergency that couldn’t be avoided. Or maybe you are living beyond your means. Create a budget and seek the help of a credit counselor.

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