Balance transfer credit cards are cards that offer a promotional low (usually 0%) interest rate for 6 months or more. This offers an opportunity to get your credit card debt from an interest-bearing card to a 0% interest card to pay it off more easily and quickly.
You can also use this technique to consolidate multiple high-interest credit card balances onto one balance transfer card (or as much as your new card’s credit limit allows).
As with any debt product, your credit score and history will factor into what you may qualify for. And the best deals are always available to those with the highest credit. So another reason to keep a close eye on your report and score.
You can get a free copy of your reports from all three credit bureaus at Annualcreditreport.com to make sure the information they’re downloading on you is correct. You can also track your score in real time and see what factors affect it with a free service like Credit Karma (<– FYI, affiliate link).
Balance Transfer Card Features That Matter
In my opinion, which is always motivated by keeping things simple, balance transfer cards are not meant to be spent. They just are temporary balance holding tools to (rather easily) reduce the most costly form of debt – credit card debt. Because of this, I tend to pretty much ignore the card’s interest rate after the promotional period ends, with the obligation to pay off the balance before then.
From this point of view, you can easily choose the best balance transfer card because the features of the spending card are completely different. So when choosing a balance transfer card, ignore all purchase features, don’t use it for spending at all (i.e. never put it in your wallet), and plan to cancel it when you use it to pay off debt.
With this approach, there are only a few key features that are important when choosing a balance transfer credit card.
1. Length of promotional 0% interest rate period
The most different aspect of choosing a card is how long the card will give you a 0% interest balance. So you will mainly focus on these functions.
Ideally, you will only transfer your balance (or multiple balances) once. And then pay them off during this 0% period. So choose a promotional period length that allows you to meet your payout plan with wiggle room.
Balance transfer cards will offer 0% interest for at least 6 months and up to 18 or even 21 months. If you cannot pay off the balance(s) you plan to transfer during this time, you must transfer the remaining balance to another new balance transfer card before the end of the promotional period. Relying on it can be risky if something changes so you can’t get another balance transfer card – either because of something going on with you and your credit or with the banks and their lending.
Other options for a balance transfer card, especially for debt you’re not sure you can pay off within the 0% promotional period, might be a low-interest personal loan. A home equity loan is another one that one might look at weighing the pros and cons.
Short answer: I would tend to aim for a card with 0% interest for 18+ months. There are usually several good options in this length of period available at any given time.
2. Balance Transfer Fee
Even if you’re shifting debt to avoid paying expensive credit card interest rates (very smart), you’re still paying a little for the opportunity (fair). There is always a balance transfer fee when you move your debt balance between cards. But if you’re comparing paying off a card over 12 months at 18% interest versus paying a one-time 3% fee, the balance transfer fee to get a 0% interest card is great!
The balance transfer fee is typically 3% of the balance being transferred or $5, whichever is greater. BUT it can vary, so consider this factor in your decision and know what to expect.
3. Annual fee
Credit cards may charge an annual fee. This is less common (if at all?) with balance transfer credit cards, but as with any credit card, always make sure you know the annual fee. And for a balance transfer card, you’ll want to choose a card with no annual fee. (Paying annual fees might make sense with certain rewards credit cards… but that’s another topic.)
4. Bank
In general, transfers cannot be made across cards from the same banking institution. So if you have a balance on your Chase bank card that you’re ready to pay off over 12 months, you’ll need to choose a balance transfer card that isn’t from Chase.
Where to find your card
Once you know what you’re looking for, you can browse current listings and find the best fit. I like that the following pages make it quick and easy to get a list of cards. I’m linking directly to their lists of current balance transfer card offers, specifically.
Bankrate Best Balance Transfer Cards
Nerd Wallet Best balance transfer cards
I also like to look at The Points Guy and other reputable sites – which almost any site that comes up at the top of a Google search will be “reputable”. Just understand that these sites make money from the affiliate commissions they earn when you click through their site for a special credit card offer. That’s why it’s a good idea to check multiple listings so you don’t miss out on certain offers that one site doesn’t mention simply because they’re not affiliated with that bank. It’s nothing complicated, you just have to be aware of it.
And for that reason too, just Google “best balance transfer credit cards” and see some of the ads that will come directly from the banks that offer these cards. You may see one not listed on these other sites to consider.
Conclusion
Well, there you have it. Make a small table with columns for 0% period, transfer fee, annual fee and bank. Then make a note on the left side of the row for each of the cards you come across that catch your eye at first glance. Fill your table on these 3-4 cards to force yourself to write down and verify key information.
Here’s a quick sample screenshot of how I would set it up in a table:
With this information, simply choose your best option and carefully read all the terms and conditions to make sure you are good to go. Apply online and take it from there. Never hesitate to call credit card customer service and ask questions as well. They can be very helpful to make sure you are not missing anything.
If you’re having trouble getting approved, take a close look at your credit to understand why. You may need to make a new purchase and look specifically for cards that are more affordable for a lower “credit rating.” Bank card listings have a “recommended credit” level listed as one of the features, so it’s worth looking. The features probably won’t be as great, but time and effort will improve your credit when you’re committed to managing your money and debt well, so stay the course!
Have more thoughts or questions on this topic? Please write them in the comments below. 👇
