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Are Balance Transfer Cards Better Than Rewards Credit Cards?

When people think about applying for a new credit card, they often look at the welcome offers and the types of rewards that can be earned with everyday purchases. Sometimes you might need another perk, besides rewards, to make you click the “Apply Now” button. This might apply to you if you are carrying a balance on one of your current credit cards and are looking for a hand-up to help pay off the debt.

But, is it better to choose a balance transfer card or a rewards credit card? Applying for either type of credit card will count as a hard inquiry and affect your credit score, so you will want to compare the advantages and disadvantages of each credit card to help you make the best decision.

Advantages Of Balance Transfer Cards

While rewards credit cards might offer welcome offers of frequent flyer miles or complimentary hotel stays when you meet a spending minimum, balance transfer credit cards will not charge interest on balances transferred from other credit cards for a predetermined time period (typically 12 to 18 months). Your new credit card might charge a one-time fee of 3% to 5% of the balance transferred (credit cards need to make money somehow). But it’s still cheaper than the interest you are paying on your existing credit card.

These cards can be very advantageous if you have any type of credit card debt as you can make payments interest free for several months. This can be a great alternative to debt repayment compared to a high-interest personal loan. You should view the 0% APR as a “second chance” to getting debt-free and rebuilding your credit.

Disadvantages of Balance Transfer Cards

While balance transfer credit cards offer an introductory 0% APR, there are several drawbacks to these cards. Possibly the largest drawback is the APR after the 0% introductory period ends. If you cannot pay off your balance in full (or most of it), the interest rates on these cards can be noticeably higher than other rewards credit cards with interest rates as high as 23%.

If your balance is too high, it might be better to swap your credit card debt for a personal loan with a lower interest rate. Of course, the post-introductory rate will largely depend on the credit card and your credit score. Not all credit cards or credit scores are created equally. It might pay dividends to look at the interest rates and perks of the card after the introductory period.

If you have a high credit score and a low balance, it might be more advantageous to apply for a new credit card with a short introductory balance transfer period and a low-interest rate.

Caps on Transfer Amounts

Another downside of balance transfer credit cards is that some credit cards cap transfers to a certain dollar amount. For example, the Chase Slate limits balance transfers at $15,000 regardless of your credit limit. Depending on the balance amount you want to be transferred, you will need to verify if the prospective credit card will allow you to transfer your full amount.

A final downside of balance transfer credit cards is the lack of purchase rewards. Cardholders of balance transfer credit cards normally have to trade rewards for 0% APRs on outstanding credit card balances. This isn’t always the case as some balance transfer cards do offer purchase rewards. However, they are usually not as lucrative as those offered by rewards credit cards.

Advantages of Rewards Credit Cards

Rewards credit cards “reward” users for spending and making payments on-time. They might award cardholders with points or cash rewards. Plus, their welcome offers entice new applicants to spend a specific amount of money within the first two or three months of account opening to receive an additional bonus.

In one way, rewards credit cards are the complete opposite of balance transfer cards that offer a “second chance” to pay off their balances without interest. With both types of cards, credit card issuers make their money through transaction fees and balance transfer fees (even when the transferred balance is paid in full before the introductory period ends).

As many balance transfer credit cards do not offer purchase rewards, rewards credit cards are better for those that pay their bills regularly. They might also be a better option for somebody who has a small outstanding balance and has more to gain from long-term purchase rewards, even if it means paying interest on credit card debt. Your amount of debt might determine if short or long-term rewards are better.

Disadvantages of Rewards Credit Cards

One big downside of rewards credit cards is the relatively higher fees that are incurred with balance transfers. Credit cards need to make a profit to remain in business. That means they can only offer so many perks.

This is why most credit cards charge no interest for the first 12 to 24 months of account opening or offer purchase rewards. If rewards cardholders do not meet the payment deadlines, they do not earn rewards points on the outstanding balance.

Rewards credit card programs might also require a higher credit score than balance transfer cards. Each balance transfer and rewards program has different eligibility requirements. Some are more stringent than others. As a whole, balance transfer cards give credit card users a chance to catch up and rebuild their credit.

People with higher credit scores will qualify for rewards credit cards that offer better rewards and have lower interest rates than post-introductory APRs offered by balance transfer credit cards. If you have a history of credit card debt or low credit score, your application for a rewards credit card might not be a sure thing. The best place to get credit score information won’t hurt your credit but will also provide essential information.

Are There Credit Cards With Rewards and Introductory APRs?

Yes! There are a few credit cards that offer 0% APR on balance transfers for at least one year and rewards for everyday purchases. You may need a higher credit score to qualify for these cards, but they do exist. Our study of the best balance transfer credit cards to apply for in 2018 can be found here.

The Verdict on Balance Transfer Cards

Which type of credit card is better? It depends on your financial circumstances. If you have a manageable credit card debt of several thousand dollars that you can pay off within the 0% introductory period, a balance transfer card will be a better option. The interest-free payments will probably be a better “return on investment” than any rewards program.

Once you become debt-free, and if your credit score is high enough, you can always apply for a rewards credit card.

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Best Balance Transfer Credit Cards To Apply For in 2019

best balance transfer credit cards

What is a Balance Transfer Credit Card?

A balance transfer credit card is a great option for those of us looking to consolidate debt in 2019 and move closer to financial freedom. Balance transfer credit cards simply allow you to transfer your debt from a high-interest credit card to one with a lower interest rate, sometimes 0% for up to a year.

When is a Balance Transfer the Right Option?

Balance transfers are a good idea for someone that has a reasonable amount of credit card debt on a high-interest credit card. The majority of reputable balance transfer credit cards require that the applicant have good to excellent credit (around 690 – 850). This isn’t a great debt consolidation option for someone hoping to repair their credit.

How Does a Balance Transfer Work?

Your existing credit card issuer will first need to approve all or part of the balance transfer request. It can take up to 3 – 5 weeks for a balance transfer to take effect, so you will need to continue making payments on your old account until the transfer has been completed.

There are some fees and limitations that apply to balance transfer credit cards. These include:

  • Balance Transfer Fees: Balance transfer fees are typically 3% to 5% of the transfer amount.
  • Interest Rates: Most balance transfer credit cards offer a 0% APR introductory rate; however, interest rates apply after this introductory period, just as they would for any other credit card.
  • Annual Fees: Ideally, a balance transfer card won’t include annual fees; however, a few do. It is important to be aware of this when looking for cards.

The criteria above are highlighted for each of the cards we’ve identified in this post.

The Top Balance Transfer Credit Cards for 2019

BankAmeriCard Credit Card

Balance Transfer Fee: 3% of the amount transferred, with a minimum of $10.

Introductory APR: 0% on purchases for 15 months.

Regular APR: 12.99% to 22.99% variable

Annual Fee: $0

Recommended Credit Score: 690 – 850

Rewards: Access to FICO score for free once per month.

Pros: No annual fee and a great introductory offer – $0 balance transfer fee on transfers made within the first 60 days of opening an account. If you are able to pay down your debt quickly, you may not incur any interest or pay any fees.

Cons: Comparatively high balance transfer fee after the introductory period, and a comparatively shorter introductory APR period. There are also no additional rewards associated with this card.

Chase Slate Credit Card

Balance Transfer Fee: 5% of the amount transferred, with a minimum of $5.

Introductory APR: 0% on purchases for 15 months.

Regular APR: 15.99% to 24.74% variable

Annual Fee: $0

Recommended Credit Score: 630 – 719

Rewards: No rewards, but cardholders can check their FICO score once a month for free.

Pros: No annual fee and a great introductory offer – $0 balance transfer fee on transfers made within the first 60 days of opening an account. This card is also available to those with average credit, compared to the rest of the cards on this list, which require excellent credit.

Cons: No rewards, and account holders can’t transfer balances from other Chase credit cards or non-credit-card debt. Transfers can’t exceed $15,000 in total, so this card isn’t a good option for someone with relatively high credit card debt. It also has a comparatively short introductory APR period.

Citi Simplicity Card

Balance Transfer Fee: 3% of the amount transferred, with a minimum of $5.

Introductory APR: 0% on purchases for 21 months.

Regular APR: 14.99% to 24.99% variable

Annual Fee: $0

Recommended Credit Score: 690 – 850

Rewards: None.

Pros: No annual fees, no late fees, and an extremely long introductory APR offer. This card is ideal for someone that needs a little longer to pay down their debt. Citi also allows you to transfer any type of debt to your card, including non-credit-card debt such as student loans and auto loans.

Cons: No rewards, and account holders can’t transfer balances from other Citi credit cards.

Citi Diamond Preferred Card

Balance Transfer Fee: 3% of the amount transferred, with a minimum of $5.

Introductory APR: 0% on purchases for 21 months.

Regular APR: 13.99% to 23.99% variable

Annual Fee: $0

Recommended Credit Score: 690 – 850

Rewards: None.

Pros: No annual fee, and a comparatively long 21-month introductory period. This is an excellent card for someone that needs longer to pay back their debt.

Cons: No rewards, and account holders can’t transfer balances from other Citi credit cards.

Discover it Card

Balance Transfer Fee: 0% on balance transfers for 18 months.

Introductory APR: 0% on purchases for 6 months.

Regular APR: 11.99% to 23.99% variable

Annual Fee: $0

Recommended Credit Score: 690 – 850

Rewards: Earn 5% cash back at gas stations, grocery stores,, or wholesale clubs each quarter. Cash back can be redeemed at any time, it never expires.

Pros: This is the only balance transfer card on this list that offers robust cash back rewards, so it is worth holding onto long after your debt has been paid off. If you have good to excellent credit and are able to pay down your debt quickly, this card is an excellent option. There are also new-cardholder bonuses that grow the more often you use your card for everyday purchases.

The 18 month 0% balance transfer fee period isn’t as long as the two 21-month options offered through Citi, but it still stacks up nicely against introductory offers from other balance transfer credit cards.

Cons: Comparatively short introductory period. Unless you can pay your debt off within six months, you will likely incur interest charges with this card.

Top Recommendations of Balance Transfer Credit Cards

Best Long-Term Value

The Discover it MasterCard is by far the best long-term value. It is the only card that offers rewards on everyday purchases, and its 18-month 0% transfer charge is a strong introductory offer.

Best Introductory Offer and Flexible Repayment Options

For those that may need longer to pay off their debt that also has the bulk of their debt in student loans or an auto loan, the Citi Simplicity card is the best option.

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5 Steps For After You Use a Balance Transfer Card

You’ve been approved for a 0% balance transfer card and have just completed the transfer! Congratulations! You’ve taken a very important first step to rid yourself of credit card debt.

However, it’s no time to rest. Although you may save hundreds or even thousands of dollars in interest, the work is not yet over. If you stop now and don’t take other important steps into consideration, you may find yourself in a far worse situation by the time your new credit card’s introductory 0% APR period ends.

balance transfer card

Here are those 5 more steps that you must take:

Stop using credit cards

The process of becoming debt free gets much easier if you don’t have to pay any interest on your existing debt. However, things can quickly go out of hand and the task can become impossible if you don’t stop using your credit cards. If you’ve taken a balance transfer card specifically for making inroads into your long pending debt, the only way you can succeed at it is by quitting using your credit cards completely.

Many such cards, such as the Chase Slate card, come with the 0% introductory APR applicable on purchases. Hence, you may be easily tempted to buy more. However, you must keep in mind that the normal APR will become applicable the moment the introductory period is over. And for some cards, this time period may not be very long.

The ideal way to go about the balance transfer process is to transfer all of your existing credit card balance to one single card with a reasonably long introductory APR period. After that is complete, put your cards away in a safe place where you can’t reach them easily. Don’t refrain from cutting them up if the temptation gets too strong. The card issuer can always send you a replacement card once you’re done dealing with your debt.

Plan for when the balance transfer card introductory APR offer ends

In the event that you’re unable to completely get out of your credit card debt by the time your new card’s introductory 0% APR offer is over, you may require a backup or a contingency plan.

If the introductory APR period lasts for 18 months and there’s still a considerable balance on the card to be paid off, you may want to start looking around for a new card with a similar type of offer. Please keep in mind there isn’t a rule that prevents you from transferring a balance from an existing balance transfer card to another one.

Know that you are well within your rights to opt for such a strategy as long as you’ve stopped using your credit cards completely and are working on a realistic plan to overcome your card debt.

Ensure that all old balances have been zeroed out

Whenever you opt for a balance transfer facility from one credit card or loan to a new credit card, you must ensure that all old balances have been zeroed out. It’s not uncommon to notice some small part or rogue interest left over on the old card, which if left non-transferred can quietly incur penalties and late fees while you’re focused on clearing away your new card’s balance.

Although it may seem tempting to close all your old credit card accounts, it may be a wiser move to let them be, as long as you’re not asked to pay an annual fee on them. This is because the FICO scoring model gives weight to the length of your credit history in the calculation of your credit score. Hence, keeping your old credit card accounts open can have a positive impact on your credit score.

Make a reasonable estimate of the amount of debt you can actually pay off

Once you’re able to control your income and expenses, you’ll find it much easier to figure out the extent of debt you can possibly pay off during your new credit card’s 0% APR period. To give you an example, if you owe $10,000 on your credit card and transfer it to the Chase Slate balance transfer card, you’ll get 15 months introductory 0% APR time period to pay off that balance. Additionally, you won’t be charged a balance transfer fee if you make the transfer inside the first 60 days of opening the Chase Slate account.

Now, divide the $10,000 balance into 15 months and you’ll arrive at a $667 monthly payment to become debt free by the end of the introductory offer period. If you won’t be able to pay that much every month, you can pay as much as your pocket allows and bring your balance down as much as possible during these 15 months. Thereafter, you can carry over the remaining balance to another balance transfer credit card.

Create a monthly budget

Your intent to become debt free is extremely important for any balance transfer strategy to bear any results. At the same time, you must also analyze the factors that brought you into this position. Figuring out your habits and understanding what led to the debts can help you strategize for the future.

A majority of people can gain control by creating a budget and writing down each one of their monthly expenses. You will be able to fully understand your budget and make the necessary positive changes when you figure out where your money is being spent.

Pull up your bank statements from the last few months and figure out where your money has been going. It may be tedious, but it will be beneficial. You may even find things that have been erroneously charged or items that are draining your account for no reason. You can plan accordingly once you’ve figured out the problem areas. You’ll have a properly written budget and be on your way to financial stability and management.

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Planning to Apply for a 0% APR balance transfer card? – Don’t do it before you read these facts

best balance transfer credit cards

Although it’s an excellent idea to use a 0% APR balance transfer credit card as a part of your debt repayment strategy, you must definitely pay heed to the fine print of the card before putting pen to paper.


You may often hear people talking about 0% APR cards like some mythical creatures, capable of amazing powers! However, if you look closely you’ll find that these cards are quite like the regular credit cards, having the same rules. To think of them in any other way can be the perfect recipe for ruining your credit score and losing out on the 0% APR offer. Nothing denying that these cards provide you free credit for 12 to 21 months, one bad move and you could be back to square-one, with a hefty APR percentage and no end to your credit woes! Let’s take you through some facts that can help you avoid such a situation:

Fact no. 1 – You may have to cough up a balance transfer fee

Although a good number of balance transfer cards don’t feature any such fee if the transfer is processed within the first 60 days of account opening, the others may come with a 3% to 5% fee on the transferred card balance, as a part of the 0% APR deal. This means that if you transfer a $ 5000 balance to a 0% APR card that has a 3% balance transfer fee, your new outstanding balance would be $ 5150. While it may still be an excellent offer considering your overall interest savings, you must factor in this fee is while working on your long-term debt clearance plan.

Fact no. 2 – Skip a payment and you’re most likely to lose the balance transfer offer, or get forced into paying a hefty penalty APR

While it’s a good strategy to transfer your high interest credit card balance to a 0% APR balance transfer card, save plenty on interest payments, and get rid of your card debt in the quickest manner possible, you must ensure that you never miss any of your monthly payments. The 0% offer can be completely cancelled if you get considerably late in making your monthly payment (by 60 days or more). What’s even worse is that you may get charged a hefty penalty APR on the remaining balance if you’re more than 60 days late (as per Credit Card Act, 2009). This penalty APR can be in the vicinity of 30%, a burden which you can definitely do without!

Fact no. 3 – Majority of these cards apply the 0% APR offer to either balance transfers or purchases

You must carefully understand the workings of the 0% APR offer before getting too excited about a balance transfer card. In majority of cases, such cards offer the 0% APR rate only on the balance transfers and not on purchases. Then you may find other types that extend the 0% APR rate for longer time periods on balance transfers, but limit its applicability on purchases for only around 6 months.

If you’re someone who regularly uses your credit card to buy items of day-to-day needs while you are clearing your credit card debt, you may pile up more and more credit unknowingly.

Fact no. 4 – Buying a balance transfer card for clearing your debt can have a short-term negative impact on your credit score

Although continuing clearing your debt over the long term can boost your credit score overall, several required moves made during the balance transfer process can hurt your credit score in the short-term. As new credit constitutes 10% of your credit (FICO) score, opening a new credit account may lead to a temporary drop in your score by a few points. In addition, just doing a balance transfer won’t make your debt go away. Your credit score will inevitably drop if your credit utilization continues to be high, meaning that you continue piling up credit card debt.

However, it may all work to your advantage if you continue making monthly payments and mend your credit utilization rate. Please keep in mind that credit utilization or the amount you owe constitutes 30% of your credit or FICO score, making it a huge and unavoidable factor.

Fact no. 5 – A balance transfer alone won’t rid you of your card debt woes

A great multitude of people think that they can quick-fix their financial problems by transferring their high-interest card balances. They don’t understand that a balance transfer alone can never rid them of their credit card woes. Although it may save them a lot of money in terms of interest rate in the short-term, they’ll still owe the originally transferred balance to the new card issuer. And the interest component can return with full force once the introductory 0% APR offer gets over. You need to be a really disciplined in your financial habits in order to make the balance transfer work, implying that you need to diligently use the 0% APR offer period to clear away your debts for good.

Fact no. 6 – The regular interest rate becomes automatically applicable post the expiry of the introductory 0% APR offer period

When you get a balance transfer card, you actually engage yourself in a battle of patience and discipline with both the card issuer and yourself! Either you stay disciplined and clear off your entire outstanding balance or have to cough up a hefty interest rate post the expiry of the introductory 0% APR offer period. That’s precisely the reason why card issuers offer the 0% rate for no more than 12 to 21 months! The applicable interest rate post the expiry of introductory period can be anywhere from 5% to 24.9%.

Final Thoughts

Don’t get taken away by all the fairy tales surrounding the 0% APR balance transfer cards. Rather, equip yourself with facts and figures, and make moves which are in line with your long-term financial plan. A momentary lapse of reason and you may wind up exactly where you started from! So be careful and make the most of balance transfer facility.


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Current 0% balance transfer card offers

You’re no stranger to debt if you constantly carry some balance on your credit card; a balance that relentlessly follows and haunts you month after month! Debt, especially credit card debt on a high interest card can be crippling. And one of the best ways of erasing it is by transferring it to another card with a lower or 0% APR. This process is called balance transfer and following are some of the best 0% balance transfer card offers you can currently use for this purpose:

0 percent balance transfer cards

Discover it card

This credit card from Discover comes with a long 18 month balance transfer offer available in many different flavors. The 18 months 0% APR introductory offer period is easily amongst the longer offer periods currently being offered in the industry. There is no annual fee and you can benefit from various attractive cashback rewards too.

By choosing Discover it cashback credit card, you can get 1% cash back on all your purchases, apart from 5% cash back on rotating categories (every 3 months). The cash back can be redeemed at any point of time in the form of payments, statement credit or deposit. Not just that, Discover automatically doubles all the cash back earned by you after you complete your first year with the card.

It’s easily one of the best balance transfer cards you can use if you are trying to erase your credit card debt, and improve your credit score in the process. You get free access to your FICO score and get constant updates related to it in your monthly statements. Alternatively, you can even log in to your online account and check the FICO score update as and when you like. There is no annual fee on the card and you’re not asked to cough up any late fee for the first late payment. $0 fraud liability guarantee and zero foreign transaction fee makes this card one of the most preferred ones for many people.

You can make the most of the 18 months 0% APR offer if you’ve been wanting to make a big purchase or transfer a hefty balance. Once you’re done using those benefits, you can earn handsome cashback rewards.

Chase Slate Card

The Chase Slate cards rids you of all your balance transfer fee worries as it charges you none, provided you opt for a balance transfer within the first 60 days of purchasing the card. Not just that, you get a 0% introductory APR on all your purchases and balance transfers during the first 15 months. To top it off, there’s no annual fee on this card.

Using the Chase Slate card, you get better control over the purchases and balances you want to pay down, and their order, via the Chase Blueprint program. You’re also allowed control over your spending habits, and hence your monthly budget. Authorized users can also be added to the card, enabling you to consolidate all your household expenditure into one single program.

Chase Slate card is ideal for people looking for cheap balance transfers, wherein the introductory 0% APR offer lasts for a considerably longer period. Majority of other similar cards feature a balance transfer fee, and hence this one can possibly save you some much-needed cash.

Chase Freedom Unlimited

A relatively new card offering from the Chase umbrella, the Chase Freedom Unlimited card combines an introductory 0% APR offer with handsome cashback rewards – and that too with a $150 new cardholder bonus and zero annual fee.

The 0% APR offer is valid for the first 15 months with the card, and can be availed for both balance transfers and purchases. Cardmembers can also take advantage of the unlimited 1.5% cash back offer on every purchase made with the card.

Talking about the $150 bonus, you can get it when you spend $500 using your card during the first 3 months after its purchase. Apart from that you can even earn a $25 bonus by adding an authorized user to the card and making your first purchase within the first 3 months with the card.

That’s not all, you can travel and shop with peace as you’re provided top security/protection features like price protection, chip-enabled security, auto rental collision damage waiver, purchase protection and zero liability protection on this card.

Citi Simplicity card

Featuring an introductory 0% APR on balance transfers and purchases, lasting for an extra-long 21-months’ time period, the Citi Simplicity card easily scores above its competitors in this department. If that isn’t enough, the card provider gives you the flexibility of not having to pay any late fee or any penalty rate ever. Like its counterparts, the Citi Simplicity also doesn’t have any annual fee. However, it charges a balance transfer fee of 3% or $ 5 (whichever is higher) on the transferred amount.

The card gives you access to the Citi Price Rewind and Citi Easy Deals programs of the Citibank that get you the lowest possible price on certain purchases. There’s a $0 liability guarantee too.

If you’ve been planning a pretty hefty purchase for some time or have been wanting to pay off a huge credit card debt, there’s hardly a better deal than the 21-month 0% APR of this card.

Citi Double Cash card

Coming with the regular introductory 0% APR offer on balance transfers and purchases (lasting for 18 months), how the Citi Double Cash card scores over its competitors is that it provides you with cash back twice – once (@ 1%) when you make your purchases and 1% again when you pay for them.

However, just like the Citi Simplicity card, it comes with a 3% or $ 5 (whichever is higher) balance transfer fee. Furthermore, the cashback cannot be earned on the balance transfers and the transfers must be made inside the first 4 months of account opening. There’s no annual fee applicable on this card either.

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How do balance transfer cards work?

Let’s cut to the chase and get behind the workings of balance transfer cards right away! Once we’re done doing that, we’ll go over few more aspects of balance transfers which are integral to the process.

The term ‘balance transfer’, unlike other complicated financial terms, is fairly easy to understand. A balance transfer is simply the process of transferring your existing balance on a credit card, to another one.  So, you pay off one credit card using another. Quite evidently, a balance transfer doesn’t reduce your debt liability in any way. You still need to pay back the original amount you had borrowed! All it does is that it moves you debt from Card A to Card B.

But why bother doing that?!

Most credit cards charge interest rates (APRs) in the range of 12% to 24%, and sometimes even more!

Now, if you’ve an outstanding balance of $6,000 on a credit card A (from Sam’s Bank, and with 20% APR), you could be paying around $100 per month only towards the interest component. So, if you make a $150 credit card payment per month, only $50 would be utilized for reducing your outstanding principal, the remaining ($100) would be used towards the interest, and go into the issuing bank’s pocket.

Now which bank wouldn’t like to bag that sort of ROI! Drumroll!! Card B (the balance transfer card) from Dan’s bank enters into the picture! Here’s what happens!

  • Dan’s bank emails you an offer that they’d transfer your $6,000 balance on Card A to Card B, and give you a 0% APR for 15 months if you transfer that balance within 30 days of opening an account with them.
  • You apply for Card B with Dan’s bank and your application for their balance transfer card is approved.
  • You provide Dan’s bank with your Card A account number and the outstanding balance on it.
  • Dan’s bank pays off that balance (to Sam’s bank) in full.
  • Dan’s bank also charges you a one-time balance transfer fee ranging between 3% and 5% of the outstanding balance transferred.
  • Dan’s bank is your new creditor now and you start making your monthly payments to them.
  • Everyone’s smiling!

How you benefit here is that you won’t have to pay any interest (APR) on the transferred balance for 15 straight months (as per the terms of balance transfer card). Now your monthly $150 payment would be used entirely for servicing your outstanding principle/debt. Even if you continue paying a minimum of $150 per month for 15 straight months, you’d have reduced your outstanding balance by over $2000, saving yourself many hundred dollars’ interest payment in the process.

When should you use such cards?

If you are financially stable and are in a steady well-paying job, transferring your high APR balance from one card to another, for saving on interest and for paying off the entire outstanding faster, may work as a very smart move. However, please keep in mind that majority of such cards come with a balance transfer fee of 3% to 5% (Chase Slate being the only exception as it has no balance transfer fee and provides a 0% Intro APR for 15 months).

When you should not?

On the other hand, it may not be that good a move to apply for a balance transfer card if your credit score is low because of late payments or some other reason/s. The chances are high that your card application may get rejected. You’ll need a healthy credit score to be eligible for a balance transfer card.

A balance transfer card can also go against your financial interests if your debt is already too big. Although you may receive some temporary relief from the monthly interest payments, you’re most likely to find yourself using your old/new card once again when the situation gets tight.

To opt for low regular APR or Intro 0% APR

You may think that it’s a given that everyone would love to use the 0% Intro APR of balance transfer cards!

No Sir/Ma’am!

0% Intro APR makes sense only if you have a small outstanding balance which you are confident of clearing during the tenure of the 0% APR offer period (ideally 12 to 18 months). In case you go with the 0% Intro APR and are unable to clear your debt during that time, the regular APR of the balance transfer card will kick in, which may even be higher than your current APR. The entire purpose of balance transfer may get lost in that case.

The solution lies in balance transfer cards with low regular APRs. You can ditch the 0% APR balance transfer cards for the ones with low regular APRs if you feel that you’ll need more than a year to pay off your entire outstanding. For instance Barclaycard Ring Mastercard has zero balance transfer fee and low regular variable APR on balance transfers and purchases.

Do balance transfers impact your credit score?

Balance transfers have no direct impact on your credit score. Credit agencies don’t factor them in during their evaluations and they don’t get flagged in the credit reports.

Having said that, please note that buying a balance transfer card can indeed impact your financial profile, which in turn may impact your credit score. This may happen in three different ways:

By altering your credit ultilization ratio: Credit rating agencies calculate your credit score based on the overall utilization of your credit lines. It’s done taking into consideration both the aggregate as well as individual utilization of each one of your credit cards/lines. Your overall credit utilization may fall and positively impact your credit score provided you don’t close your old credit card account.

By encouraging you to overspend: A balance transfer may possibly impact your credit score negatively if you use it merely for avoiding your card payments or for funding your reckless spending habits.

By reducing the age of your credit accounts: Credit history, which constitutes 15% of your credit score is based on the average age of your credit accounts and the age of your oldest credit account. Your credit score may not get impacted if you’re transferring balance between your existing credit accounts. However, it may take a hit if you apply for a new credit card and/or close the old credit card account.

By causing hard inquiries: A hard inquiry is made on your credit report every time you apply for a new credit card. Although these inquiries drop your credit score only marginally, they can be very damaging if you apply for too many credit cards or apply for them too frequently.

Final Word

If used wisely, a balance transfer credit card can go a long way in helping you manage your debt effectively. On the other hand using it for wrong reasons can harm your credit score and increase your overall costs/debts.

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How Do Balance Transfer Credit Cards Work?


You come home from work and walk out to the mailbox to see what the mailman brought you today. You walk back to the house paging through ads, bills, and colorful envelopes offering you credit card rates that sound too good to be true. You might read it and see a promise of financial freedom or you might throw it away without even opening it assuming it’s a scam. Let’s take a look at whether these credit card companies deserve your attention and why they want it so badly.


What do they mean by O%?

If a credit card company is going to offer a 0% rate in any capacity, they’re going to advertise it at you until you get sick of looking at it. What they usually mean when they offer you 0% is no interest for a certain period of time, usually between twelve and eighteen months, on balance transfers. You apply for it like you do with any new credit card and if your credit is good enough, the new credit card company moves you along with the process. You give them the information of the card with the balance you want to transfer and pay a one-time fee to transfer the balance. This fee is usually a percentage, so the higher the balance, the higher the fee. Obviously, the transfer amount needs to be within the credit limit of the new card. The two financial institutions work it out, you have a lower balance or no balance on your old card, and you have a new balance on a shiny new card that you get in the mail.

Credit card companies offer you this excellent sounding deal and make the whole process quite easy because they want their card in your wallet. It’s like any other promotion from any other company that charges a monthly fee. Think about cable and satellite companies that offer irresistible introductory rates. You sign up for a billion HD channels and a dozen DVR’s only to see your bill go way up a year later. The credit card companies draw you in with 0% and then try to entice you into using their card as much as possible through other promotions with different companies that they’re partnered with. You might get discounts at restaurants, gas stations, or online retailers encouraging you to use your new card. Before you know it, the promotional period is up, and you’re stuck with a rate and a balance that’s as high as or higher than the credit card you were trying to get rid of a year earlier.


When is this a good idea?

While these balance transfer offers are ultimately just companies trying to get new customers, sometimes they’re really as good as they sound. With some careful planning, they can be a big help in reducing or even eliminating your credit card debt. If you’re looking to consolidate debt from multiple credit cards, this could be a good way to do it. Personally, I think this is only a good idea if you can completely eliminate the balance you’re transferring during the promotional period of 0% interest. Here are a few simple steps for taking advantage of these promotions:

Step 1: Do the math.

Let’s say you want to transfer a balance to a credit card that offers 0% interest for fifteen months; a fairly common promotion. Take your current credit card payment and multiply it by fifteen. Is it equal to or greater than the balance? If yes, fantastic! Apply for your new card and count down the days to peace of mind. If not, then can you realistically adjust your monthly payment to take care of that balance in fifteen months? Don’t get discouraged if this math doesn’t work out the way you like. Just figure out an amount that you can reasonably afford and consider transferring that amount. Remember to factor in multiple credit card bills if you’re doing a partial transfer.

Step 2: Don’t you dare touch that new card.

If you’ve got your new card and you’ve made it to step two, your new credit card company will gladly remind you of the great deals you can get with your new card. They’ll send you emails and more junk mail encouraging you to swipe that card do get discounts and rewards. Don’t do it. Seriously, don’t fall for it. These are just ads to try to make you spend money where you normally wouldn’t and keep your balance nice and high. Leave your new card in your dresser or something. Bury it in your back yard. Tell your spouse to hide it and not tell you where it is no matter how much you beg. Or, you know, just put it in your wallet and don’t use it. Stumble on this step and you mess up the first step.

Step 3: Stick to the plan.

Now that you have your new card, your new payment schedule, and your new resolve to not use said card, do not be tempted to stray from the plan you’ve made. I’m a big fan of automatic payments. Make them monthly or even weekly and let your new credit card bill take care of itself.


Shop Around for Credit Cards

Credit card companies are constantly competing with each other for your business. If you notice a promotion that you like, there are probably a dozen similar ones for different cards that you can consider. Even if you aren’t looking to wipe out any significant debt, it’s a good idea to shop around once in a while to see if there are any credit cards out there that are better than the card(s) you’re using now. If you’re fortunate enough to already be free of credit card debt, many cards offer you a small percentage of cash back on every single purchase you make. It’s like having a discount card everywhere you go. Your local banks and credit unions might even have some credit cards worth looking at. Your journey can begin right here on WalletPath. Check out our best balance transfer cards to find the best fit for your debt and your lifestyle.