Balance transfer credit cards are cards that offer a promotional low (typically 0%) interest rate for 6+ months. This offers an opportunity get your credit card debt off of an interest-bearing card onto a 0% interest card to get it paid off easier and faster.
You may also consolidate multiple high interest credit card balances onto a single balance transfer card with this technique (or as much as your new card’s credit limit allows).
As with any kind of debt product, your credit score and history will factor into what you can qualify for. And the best offers are always available for those with the highest credit. So yet another reason to keep a watchful eye on your report and score.
You can get a free copy of your reports from all three credit bureaus from annualcreditreport.com to verify the information they are pulling on you is correct. You can also track your score in real time and learn what factors are impacting it with a free service like Credit Karma (<– FYI, affiliate link).
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Balance transfer card features that matter
In my view, which is always motivated by keeping things dead simple, balance transfer cards are not intended to use for spending. They are just temporary balance holding instruments for the purposes of (rather easily) reducing the most costly form of debt – credit card debt. And for this reason, I tend to largely ignore the interest rate of the card after the promotional period ends, with the commitment to pay off the balance before that time.
With this point of view, you can easily pick the best balance transfer card because the features of a card for spending are entirely different. So when you’re picking a balance transfer card, ignore all the purchase features, don’t use it to spend at all (i.e. never put it in your wallet) and just plan to cancel the card when you’re done using it for the debt payoff.
With this approach, there are only a few key features that matter for choosing a balance transfer credit card.
1. Length of promotional 0% interest rate period
How long the card will give you 0% interest on your balance is the most variable aspect of choosing your card. So this features will be your primary focus.
Ideally, you will transfer your balance (or multiple balances) just once. And then pay them off within this 0% period. So pick a promo period length that lets you accomplish your payoff plan with wiggle room.
Balance transfer cards will offer 0% interest for 6 months at least, and up to 18 or even 21 months. If you can’t pay off the balance(s) you plan to transfer within this time, you must transfer the remaining balance to another new balance transfer card before the promo period ends. Relying on that can be risky if something changes making you unable to get another balance transfer card down the road – whether due to something happening with you and your credit, or with banks and their lending.
Other options to the balance transfer card, particularly for debts you’re not confident you can pay within the length of the promotional 0% period, may be a low interest personal loan. A home equity loan is another one some could look into to weigh the pros and cons.
The short answer: I’d tend to aim for an 18+ month 0% interest card. There are usually a few good options at this term length available at any given time.
2. Balance transfer fee
Although you’re moving debt to avoid paying expensive credit card interest rates (very smart), you will still pay a bit for this opportunity (fair enough). There is always a balance transfer fee when you move your debt balance between cards. But if you’re comparing paying down a card for 12 months at 18% interest to paying a one time 3% fee, the balance transfer fee to get onto a 0% interest card is a great deal!
Typically the balance transfer fee is 3% of the balance being transferred or $5, whichever is greater. BUT it can vary, so weigh this factor into your decision and know what to expect.
3. Annual fee
Credit cards can charge an annual fee. It’s less common in balance transfer credit cards (if it’s done at all?) but as with choosing any credit card, always verify you know the annual fee. And for a balance transfer card, you’ll want to choose a card with no annual fee. (Paying annual fees can make sense for certain rewards credit cards… but that’s a different topic.)
4. Bank
Generally you can’t make transfers across cards from the same banking institution. So, if you have a balance on a Chase bank card that you’re ready to pay off over 12 months, you’ll need to choose a non-Chase balance transfer card.
Where to find your card
Once you know what you’re looking for, you can shop around for current offers to find your best match. I like the following sites to get a list of cards to quickly and easily scope out. I’m including the link directly to their lists of current balance transfer card offers, specifically.
Bankrate Best Balance Transfer Cards
Nerd Wallet Best Balance Transfer Cards
I also like looking at The Points Guy and other reputable sites – which almost any site that comes up in the top of a Google search will be “reputable.” Just understand that these sites make money off of the affiliate commissions they earn when you click through their sites to a special credit card offer. So that’s why it’s good to check multiple lists so you’re not missing certain offers that one website doesn’t mention simply because they don’t have an affiliate relationship with that bank. It’s nothing dicey, just something to be aware of.
And for that reason, also just Google search “best balance transfer credit cards” and look directly at some of the ads that will come up directly from banks offering these cards. You might see one that wasn’t featured on those other sites to consider.
Conclusion
So, there you have it. Make yourself a little table with columns for 0% period, transfer fee, annual fee, and bank. Then write down the left side a row for each of the cards that you come across that appeal to you at first take. Fill out your table on those 3-4 cards to force yourself to write down and verify the key info.
Here’s a quick example screenshot of how I would set this up in a spreadsheet:
With this info, simply decide your top choice and read all the terms carefully to verify it’s good to go. Apply online and take it from there. Never hesitate to call the credit card customer service and ask questions as well. They can be very helpful to make sure you’re not missing anything.
If you’re having difficulty getting approved, look carefully at your credit so you understand why. You may need to reshop, looking specifically for cards that are more available for lower credit “worthiness.” The Bankrate card lists have “recommended credit” level listed as one of the features so that’s a helpful place to look. The features will likely not be as great, but time and effort will improve your credit when you’re committed to managing your money and debt well, so stay the course!
Do you have other thoughts or questions on this topic? Please put them in the comments below. 👇