If you're shopping for the best balance transfer credit cards, you're about to make a smart move. Debt is a tremendous problem in the US and credit card debt specifically, plagues many households. According to numbers released by the Federal Reserve at the end of 2015, the average American adult is in credit card debt to the tune of $4717.
The problem with credit card debt is that it often grows faster than it can be paid off. While $4717 may seem manageable, each month interest and fees are added to that principle amount making it incredibly difficult to climb the growing mountain of debt. I've put together a list of the top credit cards for balance transfers in order to make your climb a little easier.
The Best Balance Transfer Credit Cards: What to Consider
The Best Balance Transfer Credit Cards
Before you decide to move all of your debt onto a 0% balance transfer credit card you need to do the math to figure out if it is worth it.
Many balance transfer cards will charge a transfer fee that could be up to 5%. Is the fee charged going to be less than the interest you would have paid on the other cards?
Closing several cards and opening one new one will affect your credit score in some way, perhaps only temporarily. This isn't a quick fix but it can help if you have a clear plan to eliminate your debt within a given amount of time. Here are some things to consider to help you choose the right card for you:
- Will you qualify? Look at the qualifications or sit down with a bank representative to find out if you should bother applying. Don't waste time on applying for a card you won't qualify for.
- Find one with a long introductory rate. Balance transfer credit cards have a period of time when you first open the card when you do not have to pay interest. The longer that period is, the better, particularly if you have a large amount of debt to transfer.
- How much is the interest and is it subject to changes? Interest or APR is always changing and difficult to pinpoint. Ask about it before you sign up for anything and always ask how high variable rates can possibly fluctuate.
- Many balance transfer cards will charge a transfer fee that could be up to 5%. Is the fee charged going to be less than the interest you would have paid on the other cards?
Next, I will go into more detail on some of these considerations before delving into my balance transfer credit cards comparison.
The Best Balance Transfer Credit Cards: Eliminating Debt
There are several ways of relieving yourself of a large debt burden. Not all of these strategies are created equal, however, so it's important to understand your options.
What is the best way to eliminate debt?
The safest way to eliminate debt is to make payments and slowly pay it off over time. You can even try asking creditors for lower interest rates. In many cases, the lender would prefer negotiating to help you pay your debts rather than drowning you in interest so that you never pay. In addition, CNBC reports on a survey which found that 80-85% of the time, consumers are successful when they ask their card issuer to waive fees.
However, if the traditional way of paying down debt feels like you are just treading water without making any real progress, a different method may be used.
Avoid drastic measures if possible
There are several ways to eliminate debt and they each come with considerable drawbacks. Bankruptcy, debt settlement and consolidation are all ways people get out of debt but each one affects your credit in varying degrees.
Extreme options like bankruptcy should always be the very last resort. What you may not know about bankruptcy is that it doesn't affect all credit scores in the same way.
According to the legal experts at Nolo, the severity of the effect depends upon your credit rating prior to filing. If you have a lot of debt, multiple delinquencies, and a lack of assets, bankruptcy may not significantly lower your credit score. If, however, you have fairly decent credit but have been able to keep up on most of your accounts, your credit score will plummet with a bankruptcy.
Using the Best Balance Transfer Credit Card to Reduce Debt
Balance transfer credit cards are a popular form of credit card debt consolidation. Lenders offer balance transfer credit cards to people who have several sources of debt, charging little to no interest for a limited time. You then use that card to pay off your other debts, transferring all debt to a single card. The idea is that a single card with a single interest rate is easier to handle than several debts that are each collecting separate interest.
The Best Balance Transfer Credit Card Primer
A 0% balance transfer credit card is a godsend if you can't make headway with your credit card debt. Paying off any type of debt is an uphill battle when you're dealing with high balances and even higher interest rates. But although you can't snap your fingers and get rid of balances, you can do something about your interest rates.
Zero percent teaser rates are just that – teasers. They don't last forever.
A balance transfer moves debt from one credit card to a card with a lower rate - putting thousands back into your pocket. This allows you to save on interest and pay off debt faster. Be honest, who wouldn't jump at a chance to get a low-rate credit card and get ahead? It's an undeniable money-saving strategy. But before transferring your balances, here are five things you should know about 0% balance transfer credit cards.
1. Look Out for Balance Transfer Fees
A 0% balance transfer credit card might be the break you need to save money and pay off debt faster, but transferring a balance isn't free. There's a balance transfer fee, and unfortunately, you're charged this fee each time you move a balance to the card.
There's no set fee for everyone, rather the amount paid is based on how much you transfer to the new credit card. For the most part, credit card issuers charge a 3% balance transfer fee. So if you transfer $10,000 of credit card debt, you'll pay $300.
Paying to move debt might seem like a rip-off - and maybe it is. However, 3% might be a drop in the bucket, especially if the teaser rate helps you pay off balances sooner and save tremendously. Take note however, there is one card in my list of the best balance transfer credit cards for 2016 which offers an option to avoid the transfer fee.
2. "Teaser Rates" Are Temporary
Zero percent teaser rates are just that – teasers. They don't last forever. Some balance transfer credit cards offer 0% for the first six months, whereas others offer it for the first 12 or 18 months. Either way, 0% can jumpstart debt repayment. Just know that the standard APR kicks in after this period, and this rate might be comparable or higher than the rate you're currently paying.
The best way to handle this temporary rate is to read the fine print so you know what to expect interest-wise down the road. Then make a definitive budget for paying off as much of your debt as possible before the 0% APR expires.
3. Not Everyone Qualifies
Having an existing credit card doesn't automatically qualify you for a 0% balance transfer credit card. Just like any other credit card you've applied for, the bank will check your credit to see if you meet the qualifications. A low FICO score or a history of late payments is the kiss of death when applying for credit.
Zero percent interest isn't a right, it's a privilege, and only those with good to excellent credit are approved. According to credit reporting bureau Experian, a good credit score is 700 or higher, while 800 and up qualifies as excellent. The upside, of course, is that if you have a lot of high-interest debt but aren't yet in a crisis situation, transferring your balances gives you an excellent opportunity to get back on track.
4. You Can Transfer Other Types of Debt
Balance transfers aren't limited to credit card debt. It might come as a surprise, but many cards let you transfer other types of debt, including car loans and furniture loans. Balance transfer cards are an excellent tool if you're looking to consolidate all your debts to save money. This means you could pay off debts that are costing you interest fees, and then simply make your loan payments to your credit card instead, interest free.
5. Teaser Rate May Not Apply to New Purchases
As far as the teaser rate goes, balance transfer cards differ. For example, some cards offer 0% interest on balance transfers and purchases, whereas other cards only offer 0% interest on balance transfers. This doesn't mean you can't make purchases with the latter, but you'll pay the standard APR from the start.
The Best Credit Cards for Balance Transfers
Chase Slate Review
- No introductory balance transfer fees
- A long introductory period
- No penalty APR
- No annual fee
- Free monthly FICO scores
- No cash back rewards
- Cannot transfer balances from other Chase products
The Chase Slate card is the ideal option if you have high balances to transfer and pay off. The reason for this lies in the 15-month 0% APR period. This introductory rate applies to both new purchases and balance transfers, making it an even more appealing choice. After the introductory period expires the Chase Slate APR is 13.24% to 23.24%.
While there is no cash back rewards program with this card, it does provide other attractive benefits. There's no annual fee, and your APR won't go up if you make a late payment.
Keep in mind that you'll need to transfer your balances within 60 days of opening your account, or else you'll be charged at the regular APR, plus a 5% fee. In addition, you cannot transfer balances from other Chase cards.
The Chase Slate card ranks number one in my balance transfer credit cards comparison due to the long period of time it affords you to pay back significant amounts free of interest charges.
- Sign-up bonus: There is no balance transfer fee on transfers made with the first 60 days of account opening.
- Key fees: After the first 60 days, balance transfers cost $5 or 5%, whichever is higher. Cash advances cost the greater of $10 or 5%, and foreign transactions carry a 3% fee. Late payments run between $15 and $37, and returned payments cost up to $37.
- Introductory APR: You get 0% APR for the first 15 billing cycles on both purchases and balance transfers.
- APR: After the introductory APR expires your rate will be between 13.24% and 23.24% on both new purchases and balance transfers. The cash advance APR is 25.24%.
- Other perks: You'll also enjoy no penalty APR, free monthly FICO scores, an embedded chip, purchase and price protection, as well as fraud monitoring and protection.
- 0% APR on balance transfers for 18 months
- Good cash back rewards program
- Excellent customer service
- Free FICO scores
- Cash back matching for first year
- Discover not universally accepted
- 0% APR for new purchases only for first six months
The Discover it® card offers 0% introductory rates which means you do not have to pay interest on balance transfers for a generous 18 months. There is no annual fee, and Discover is well known for its outstanding customer service.
Another appealing feature of this offer is the cash back rewards program, which is fairly atypical of the top balance transfer credit cards. You get 5% cash back up to $1500 in qualifying purchases through affilates like Amazon.com, Sam's Club, and more. All other purchases earn 1% cash back. On top of this, Discover offers a Cashback Match program, which means they will match your rewards earnings dollar for dollar at the end of your first year.
Although Discover cards are not accepted everywhere, the Discover it® 18-month balance transfer offer is an excellent choice for anyone looking for a long introductory period. The rates are not only good, the card itself has an excellent cash back rewards program.
The fact that you get so long to catch up on paying off balance transfers - free of interest charges - combined with the rewards program earn this card a slot in my top 5 best credit card balance transfer offers.
- Sign-up bonus: Discover will match your cash back earned dollar-for-dollar at the end of your first year of membership.
- Key fees: Balance transfers cost 3% of the amount transferred, and cash advances are charged a $10 or 5% fee, whichever is greater. Your first late payment fee is waived, however second and subsequent late payments will cost up to $37. Returned payments are $37 as well.
- Introductory APR: There are two introductory interest rate tiers - 0% for six months on purchases, and 0% on balance transfers for 18 months. Transfers must post by February 10, 2017.
- APR: At the end of the intro period, the APR for both purchases and balance transfers ranges between 11.24% and 23.24%. Cash advances carry an APR of 25.24%.
- Other Perks: There is no penalty APR, and you get $0 fraud liability. You also get access to Freeze it® which allows you to switch your card on and off from the mobile app, just in case you misplace it. You get free FICO scores, and there are no overlimit fees or foreign transaction fees.
Citi Simplicity Card
- 21-month introductory period
- No late fees or penalty interest
- 0% APR during the introductory period for both transferred balances and new purchases
- Set your own due date option
- No annual fee
- No rewards program
The Citi Simplicity Card features the longest 0% APR introductory period out of all of the cards on my list - a whopping 21 months. The best part is that this applies to both new purchases and balance transfers, which is rare for this type of card.
Unlike its cousin the Citi Diamond Preferred Card, Citi Simplicity's unique feature is not the perks it includes but the fees it doesn't. Despite the Citi Simplicity balance transfer fee and the lack of a rewards feature, it's extremely difficult to find anything comparable to the 21-month introductory 0% APR period. This offer alone makes the card one of the best balance transfer credit cards of 2016 to make my list.
- Sign-up bonus: There is no sign-up bonus with this card.
- Key fees: Balance transfers cost $5 or 3%, the greater of the two. Cash advances come with a $10 or 5% fee. Foreign transactions cost 3% of the amount transacted, and returned payments cost up to $35.
- Introductory APR: The Citi Simplicity intro APR is unusually long - you'll get 0% interest for 21 months on both purchases and balances transfers. Transfers must be completed within the first four months in order to qualify.
- APR: The regular APR, following the intro period, is between 13.24% and 23.24%, depending upon your creditworthiness. Cash advances carry the same APR.
- Other perks: Citi gives you the benefit of no penalty rates, no annual fees, and no late fees. They also provide a comprehensive suite of perks like travel assistance, worldwide car rental insurance, extended warranties, $0 liability, and the ability to choose your own payment due date.
Blue Cash Everyday Card Review
- 0% APR for one year
- Lucrative cash back rewards program
- $150 bonus after spending $1000 in the first three months
- No annual fee
- Penalty APR for late payment
- Cash back must be redeemed as statement credit
Blue Cash Everyday® is a solid balance transfer offering from American Express. This card gives you a full year of 0% APR on both new purchases and balance transfers.
The other major benefit of this option is that it comes with a cash back rewards program. You get 3% back at grocery stores, up to $6000 per year in purchases (then it drops to 1%). Gasoline will net you 2% back, and other purchases are rewarded at the 1% level. There are no rotating categories and you don't need to enroll to get your rewards.
Despite its (minimal) disadvantages, the cash back rewards program and the hefty introductory 0% APR period make this card a great choice if you always pay on time and wish to pay down some of your debt via balance transfer.
- Sign-up bonus: You'll receive a $150 cash bonus if you spend $1000 within the first three months of account opening. If you apply by January 11, 2017 you'll also get 10% of your Amazon purchases back, up to $200.
- Key fees: Balance transfers are the greater of $5 or 3%, as are cash advances. Foreign transactions will cost you 2.7% of the transaction amount. Late or returned payment fees are as high as $38.
- Introductory APR: The intro period for Blue Cash Everyday includes a 0% APR on purchases or balance transfers, for the first 12 months. Transfers need to originate within 30 days of opening your account in order to qualify for this rate.
- APR: Once your intro APR expires, the interest rate will fall between 13.24% and 23.24%. The cash advance APR is 25.49% and the penalty APR is 29.49%.
- Other perks: AMEX offers accelerated rewards earning when you add cards for your family and friends. You also benefit from their collection of travel perks, like the Global Assist Hotline and roadside dispatch. In addition, Blue Cash comes with free two-day shipping at 140 qualifying online stores, as well as presale access to a multitude of entertainment and dining events.
BankAmericard Credit Card Review
- 18-month introductory 0% APR period
- No annual fee
- Free FICO scores
- $0 Liability Guarantee
- Easy balance transfer by phone upon approval
- No rewards program
- 3% balance transfer fee
- Penalty APR
BankAmericard is one of only two products in my balance transfer credit cards comparison to offer an 18-month introductory period. This is an extraordinarily good deal if you want to pay off a considerable amount of debt with no interest charges and need a while to do it.
In addition to 18 full billing cycles to pay off your transfers at no interest, you will also be spared an annual fee, and you'll be able to quickly and conveniently transfer your balances over the phone, as long as you apply that way and are approved.
BankAmericard is a well-rounded option if you're specifically seeking favorable balance transfer terms.
- Sign-up bonus: There is no signing bonus with BankAmericard.
- Key fees: Balance transfers will cost you the greater of 3% or $10. Cash advance fees vary by type, and will cost you either $10 or 5%, or $10 or 3%. Overdraft advances are $12 per transaction. Late fees can go as high as $37, and returned payments as high as $27.
- Introductory APR: There is a 0% introductory APR for 18 months on balance transfers, however keep in mind that this rate does not apply to new purchases.
- APR: The standard APR runs between 11.24% and 21.24%. There is a 29.99% penalty APR, and a cash advance rate of between 14.24% and 25.24%.
- Other perks: You get all the standard BoA protections - an EMV chip card, mobile banking, $0 liability, optional overdraft coverage and more. Plus you get free FICO scores on your monthly statement and online.
Use the Best Balance Transfer Credit Card Wisely
Ultimately there is no one financial product that can solve your debt woes. A good 0% balance transfer offer can be an effective tool, but only if you accompany this strategy with good credit card practices.
By combining a solid repayment plan with a manageable budget for future purchases, you can successfully tame the debt monster. As long as you view a zero percent interest card as just one element of your overall financial strategy, you'll make great strides toward a secure financial future.
Among the many different perks, fees, and other terms, weigh the pros and cons of each card before deciding which is right for you.
While you're making this move to improve your financial picture, you might consider whether you're getting the most out of your bank account. Check out the best online checking accounts and best online savings accounts to see if there's a better offer for you out there.