How do balance transfer credit cards work?
- Determine your level of debt and how high the interest
- Shop around for balance transfer credit cards, preferably with a 0% intro APR period
- When you select a card with agreeable terms, transfer that outstanding debt
- Pay off that transferred debt, taking advantage of your balance transfer credit card’s interest-free window
Are balance transfer credit cards a good idea?
Balance transfer credit cards can be a handy tool for dealing with debt before it takes over your life. However, we would be remiss if we didn’t also point out the importance of responsible card use. In general, you should never charge something to a credit card you can’t afford. Sometimes, this is easier said than done. Sometimes, you do need to pull the trigger on a big purchase you might not have the cash for. In these situations, a good balance transfer credit card with 0% intro APR can help you tackle that balance before interest takes effect.
What is a zero balance transfer credit card?
The term “zero balance transfer credit card” refers to a balance transfer card with 0% introductory APR. You generally want to stick with cards that offer these windows of 0% interest as they allow you time to pay off the transferred balance without incurring interest. The Chase Slate® card is a good example of a 0% balance transfer credit card and, as we’ve covered, it grants the cardholder a 15-month window of interest-free bliss.
What is the balance transfer fee on a credit card?
A balance transfer fee is usually a percentage you need to pay when you transfer a balance. This percentage is applied to the transferred credit card balance although some cards will also require a flat rate. For example, the Chase Freedom® card has a balance transfer fee of either $5 or 5% of the amount of each transfer (whichever is greater).
How do you transfer a balance from one credit card to another?
Once you’ve done your research and been approved, gather account information for each card, call the customer service center for your balance transfer credit card and request a transfer. They’ll contact your other credit card company and handle the logistics.
How long does it take to do a balance transfer on a credit card?
This can vary, but the general estimate is a week or more. In the case of dealing with a creditor who needs to be paid by check, this can take even longer.
Do I have to cancel my old credit card(s) after transferring my balance?
No. In fact, it’s recommended that those who get a balance transfer card keep their old credit cards after the balance has been transferred — mainly to hold on to credit longevity. Maintaining credit longevity helps your overall credit score, and you could get dinged for canceling your older cards. You could also eliminate any future rewards benefits that these cards provide.
However, the main goal of getting a balance transfer card is to alleviate debt. So, if you got overextended with your old cards, you may want to remove the temptation by cutting ties. Especially if your spending doesn’t justify the annual fees.
Is a balance transfer worth it?
If you’re carrying a large amount of debt on a high-interest credit card, or have multiple debts that you want to pay with a single bill without consolidating debt, it may well be worth it. Transferring a balance to a 0% intro card may even save you money! For instance, on a high-interest 18% APR credit card, paying $350 a month for 15 months on a $5,000 balance would cost you $664 in interest. To calculate your interest and potential savings, check out our debt payoff calculator.
How do balance transfers affect your credit?
When you open a new credit card, you’ll probably see a short-term minimal drop in your score for a new hard inquiry on your credit report. Where a balance transfer credit card can help your score is credit utilization, which accounts for about one-third of your credit score. The more you can reduce your credit utilization rate, the better the outcome for your credit score.
Do balance transfers affect your credit?
Yes. When you open a new credit card, you’ll probably see a short-term minimal drop in your score for a new hard inquiry on your credit report. Where a balance transfer credit card can help your score is credit utilization, which accounts for about one-third of your credit score. The more you can reduce your credit utilization rate, the better the outcome for your credit score.
What’s the difference between a balance transfer and low-interest credit card?
There’s a lot of overlap between the best balance transfer credit cards and the best low-interest credit cards, but, in general, it comes down to whether or not the introductory 0% APR is also extended to purchases. Typically, balance transfer credit cards are going to extend their best introductory rates to transfers specifically for up to 18 months. They may offer super-low or 0% introductory APR on purchases, but usually for a shortened period of time, such as six to 12 months. The best low-interest credit cards extend introductory 0% APR to both transfers and purchases, giving you a year or more in some cases, to enjoy interest-free payments. This makes them a great option for large purchases, such as a new refrigerator, not just transfers.
Balance transfers are a great way to enjoy a nice, long window of introductory 0% APR. With the right balance transfer credit card and an understanding of what is a balance transfer, you could save on interest! The best cards will offer extremely low or 0% interest rates, no balance transfer fees, and an extra-long period to pay off debt.
Research more balance transfer credit cards
We designed our directory to highlight only the most important features. Those are the ones that would best help the cardholder get out from under credit card debt. There are other key factors we consider, as well, including rates, introductory APR, and more.
Rewards Tier Level
Great Signup Bonus
Great Ongoing Rewards
Balance Transfer Fee 3% or lower
Intro Balance Transfer APR 0% 12+ Months
Only Fair Credit Score Needed
Here are the best balance transfer credit cards of 2018
- Discover it® 18 Month Balance Transfer Offer: Best overall
- Blue Cash Preferred® Card from American Express: 0% interest and cash back rewards
- BankAmericard® Credit Card: Low upfront costs
- Chase Slate®: $0 intro balance transfer fee
- Chase Freedom®: Great signup bonus