How to Save Money With a Balance Transfer

Credit cards

When is the answer to credit card problems yet another credit card? If you can use a balance transfer offer pay off your debt. Photo: Frankie Leon

When you’re carrying a lot of high-interest debt, it’s hard to imagine how another credit card can possibly help your situation. However, the right kind of credit card – a balance transfer card – may actually provide some relief.

But before you can realize the benefits of a balance transfer, you have to consider how much you might be paying in interest now.

Let’s say you’re carrying $5,000 in revolving credit card debt at an 18% APR. If you used the card enough to maintain that balance despite your monthly payments, you would pay a total of $900 in interest your first year. Ouch.

Even worse, let’s say you paid only $100 per month until the balance was gone. In that case, paying off your debt would take a cool 94 months – or almost eight years – and cost $4,311.18 in interest on top of your balance. That’s a lot.

Balance Transfer Offers to Consider

The Chase Slate® card is at the top of almost any list of best balance transfer cards because it doesn’t charge a fee for balance transfers during the first 60 days of account opening. However, there are some other balance transfer offers to consider that do charge a balance transfer fee. It’s up to you to weigh the pros and cons and decide if it is worth it.

One card that comes with an excellent balance transfer offer is the Discover it® Cashback Match™. This card is a popular option because it comes with an introductory 0% APR period available on purchases and balance transfers – at 14 months. If you have a big balance to pay off, having that time to pay down your debt could truly benefit you.

Another perk – the Discover it® card offers a rewards program that makes it easy to earn 1% cash back on all purchases and up to 5% cash back on categories that rotate every quarter. Here are some additional details:

Discover it® Cashback Match™


Highlights:

Card Highlights Provided by Discover:
  • New! We’ll monitor your Social Security Number. Get an alert if we find your Social Security Number on any of thousands of risky websites.* Activate for FREE.
  • You could turn $150 into $300 with Cashback Match™. Get a dollar-for-dollar match of all the cash back you’ve earned at the end of your first year, automatically.
  • Earn 5% cash back in rotating categories each quarter like gas stations, Amazon.com, restaurants, wholesale clubs and more, up to the quarterly maximum each time you activate. Plus, 1% cash back on all other purchases.
  • Redeem your cash back for any amount, any time. Cash rewards never expire.
  • 100% U.S. based customer service.
  • Get your FICO® Credit Score for free on monthly statements, on mobile and online.
  • No annual fee.
  • Click "APPLY NOW" to see rates, rewards, FICO® Credit Score terms, Cashback Match™ details & other information.

A third option is the always popular Chase Freedom® card. Not only is this card considered one of the best no annual fee credit cards out there, it’s also touted for its excellent rewards program. Offering a sign-up bonus and a 0% introductory APR on purchases and balance transfers for 15 months doesn’t hurt either.

Here are some of the factors you should consider before signing up:

Chase Freedom®

Highlights:

  • Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening
  • Earn 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate
  • Enjoy new 5% categories each quarter like gas stations, restaurants and drugstores
  • Unlimited 1% cash back on all other purchases - it's automatic
  • 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 15.99-24.74%. Balance transfer fee is 5% of the amount transferred, $5 minimum
  • Cash Back rewards do not expire as long as your account is open
  • No annual fee

Making a Balance Transfer Work for You

If you’re carrying high-interest debt and struggling to find a way out from under it, a balance transfer credit card might give you the breathing room you’re looking for. Just remember that most balance transfer cards charge a balance transfer fee equal to 3%-5% of your balance for the privilege. The only card currently waiving that fee for the first 60 days of account opening is the Chase Slate® card, so that might be the way to go if you’re adamant about avoiding fees.

Whatever option you choose, remember that this is your opportunity to pay down your debt once and for all. Don’t take the easy way out and continue making the lowest payments possible. Instead, figure out how many months you have that promotional 0% APR, and use that time to make headway against your debt without the burden of added interest.

A balance transfer can help you become debt-free once and for all, but only if you do your part.