Balance Transfer Credit Cards – Best 7 Options to Consider
Balance Transfer Credit Cards: If you want to pay off a credit card balance while eliminating high interest rates, you may be considering getting a credit card that offers an attractive APR of 0 percent or an overall lower annual percentage rate (APR) than you currently pay. Yet how do you choose the best credit card for your balance transfer?
For balance transfers and/or sales, the best balance transfer credit cards generally offer no annual fee and an introductory interest rate. Such intro deals act as the main advantage for most of these cards— sign-up incentives and high reward levels will be tough to get through — so they are perfect for people focused on paying down debt instead of collecting rewards.
Most cards offer both rewards and good opportunities to pass money, however, so it’s important to compare the choices and decide how you’re going to use your ticket.
Frequently Asked Questions
What Is a Balance Transfer?
A transfer of balance involves the transfer of credit card debt from one account to a new credit card. This is generally done by people because they can transfer the debt to a card offering to charge for a limited time no interest on transferred balances, such as 15 months with 0 percent APR.
How Do Balance Transfers Work?
When applying for a new card with a balance transfer offer, the new card company usually asks you what credit cards you want to transfer debt from, the account numbers of those cards, and the amount you want to transfer.
The sum can not be more than your credit limit, and the balance transfer limit is sometimes less than the total credit limit of the new card. For example, you may be approved by a credit card issuer for a $15,000 credit limit with a $10,000 balance transfer limit.
If there is no introductory APR, you will pay the card’s regular interest rate the entire time you are paying off the balance. In either case, you will have to be paying a fee to the new credit card company to transfer the money, often about 3% of the total balance, or a minimum of $5.
Who Is Balance Transfer Right For?
You could benefit from a balance transfer if:
- You can repay the balance quickly. If you pay off the balance before the introductory APR expires, you will save money on interest charges.
- You have good credit. You will likely qualify for the best balance transfer cards.
A balance transfer may not be for you if:
- You want to continue adding charges to your card. Balance transfer offers do not work at reducing debt levels if you are going to instantly recharge the balance. Make sure you are only transferring an amount you can afford to pay off without incurring new debt.
- You will not realize savings. Check every sides before transferring a balance. If you want to pay off the debt quickly, make sure the cost of the balance transfer fee does not outweigh how much you will have to pay in interest. Whether or not you will save money depends on your current card’s APR, how much debt you have, the new card’s balance transfer fee, and how quickly you plan to pay off the debt.
- You want more time to get out of debt. Even with the longest balance-transfer periods, you have less than two years to pay your balance down to $0. If you can qualify for a personal loan at a better rate than what your current card has, you could pay off your debt in even installments over the course of a few years.
How Do you Choose a Balance Transfer Card?
Choose a balance transfer offer based on both the rate you will receive now and the rate you will receive later. Just in case you don’t pay off the balance before the end of the 0% APR period, you should know how much the regular APR will cost.
Follow these steps:
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Look at your budget and your debt: Figure out how long you need to completely pay off your balance.
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Do the math: Determine if you will save money by transferring your balance or balances.
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Explore your options: Seek out cards that allow you prequalify for an offer. It’s not a guarantee of approval, but it’s better than applying blindly.
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Choose the card: Apply for the card that gives you the best combination of time to pay off debt while accruing zero interest, low fees, and other features important to you, like customer service tools or rewards.
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