Opening a new balance transfer credit card is a good way to save on your existing credit card debt. It helps consolidate your debts and reduce your monthly credit card payments to a single payment.
The benefit of a balance transfer card is that most have a 0% introductory APR on balance transfers for a period of 6 to 21 months, allowing you to focus on paying down debt without accruing additional interest rate charges. Keep in mind that if you don't pay off your balance before the introductory rate period expires, you may be responsible for paying the interest on the entire original amount. Also, most balance transfer cards come with a balance transfer fee.
So how do you choose the best balance transfer credit card for you? Here's a quick step-by-step guide and a few options from our partners to help you decide on the right card.
1. Choose a card you can qualify for.
Don't get stuck applying for a card you won't be approved for. A good credit score can increase your chances of being approved for a balance transfer card with the best terms. Pay attention to the average approved credit score for a card before deciding to apply. If your credit score is significantly below the average, you may be less likely to get approved for the card.
2. Choose a card with a long introductory rate period.
The best balance transfer cards have a lengthy 0% introductory APR period. For instance, the Citi® Diamond Preferred® Card has a 0% introductory APR for balance transfers and purchases for 21 months (after that, the variable APR will be 13.99% to 23.99%). Choose a card that will give you the time you need to pay off your credit card debt in full.
3. Choose a card with a low balance transfer fee.
Most cards charge you a small percentage of the balance you're transferring as a fee, usually three to five percent. Calculate how much you will be charged to make sure you're comfortable paying the additional fee. One card, Chase Slate® (this card is no longer available on our site), currently offers an introductory $0 fee for balances transferred within the first 60 days your account is open. After that, the fee for future balance transfers is 5% of the amount transferred (minimum $5).
4. Choose a card with no annual fee (unless it's a better deal).
Since you'll already be paying down credit card debt on your new card, avoid cards that will charge you additional annual fees unless they come with benefits that will really help you, like a lengthy introductory rate period. The Discover it® is one of many balance transfer cards without an annual fee.
5. Choose a card that resets to a low APR after the introductory rate.
In case you're unable to pay back your full balance during the introductory rate period, get a card that will reset to a low APR. The Capital One® Platinum Prestige Credit Card has a regular APR starting at 10.9%. Your goal, however, should be to pay off your credit cards in full by the time the introductory rate has expired.
Whichever card you apply for, remember to keep a few caveats in mind:
- If you don't pay off your transferred balance during the introductory period, you could be required to pay the interest on the entire original transferred amount, not just the remaining balance. Schedule out your payments to accomplish this repayment goal before the intro period ends.
- The balance transfer credit cards with the best rates and benefits are typically only available to consumers with excellent credit scores. Keep this in mind while shopping around.
- The point of a balance transfer card should be to help you pay down debt, not accrue more. Don't be tempted to spend by the 0% interest rate on purchases that many cards offer.
- Even a card without an annual fee can come with other fees. Make sure to read all of the fine print of the card you're interested in before applying.
Interested in learning more? Check out the 10 best balance transfer cards - compare reviews and apply online.
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