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Balance transfers are a tool that (if used wisely) can help people pay off credit card debt faster. By transferring debt from one credit card to a card with a 0% introductory APR balance transfer offer, you are buying yourself time to pay down the debt without racking up onerous interest charges.
While it’s fairly simple to complete a balance transfer, there are some rules to know before you jump on a new offer:
- For starters, you can only complete a balance transfer between cards from different banks. That means you can’t transfer debt from the a Chase credit card to another Chase credit card, for example.
- Another common feature of balance transfer cards is the balance transfer fee. This is a fee that most cards charge when you transfer a balance, and is typically around 3% of each transfer. If you are transferring a $1,000 balance and you pay a 3% balance transfer fee, that would add $30 to your balance on the new card. It’s not ideal, but think of it this way: It’s a small price to pay when you consider how much you stand to save by completing a balance transfer.
- Most transfers must be requested within 30-60 days from the account opening to qualify for the intro period. So don’t sign up for a great balance transfer offer and let the clock run out on the time you have to transfer the balance.
- Intro periods eventually end. So if you’re not sure you can pay off your balance before the intro period ends, consider that before you sign up for the offer. Also, some intro periods only apply to the transferred balance, not to new purchases. So be careful before you start using your card to rack up new purchases.
- You may be capped on how much you can transfer. Some credit card issuers will put a limit on the amount of debt you can transfer. That cap can be a percentage of your total credit limit or a specific dollar amount. And, in general, the total cost of your balance transfer (which includes any fees) can’t exceed your available credit limit.
When would I need to do a balance transfer?
If you find yourself overwhelmed by credit card debt, a balance transfer can be a great way to pay it off (or at least a substantial portion of it). You can take the needed time to pay your balance without being charged high interest rates — as long as you use the card responsibly.
A balance transfer can be necessary if you have a balance on a high interest credit card. For example, if you owe $3,000 on a card with a 24.99% variable APR, it could take you months to pay it down if you’re just making the minimum balance, because interest is accruing at a rapid pace. By transferring to a new card with a 0% intro APR, your payments are going entirely toward your principal debt, and interest won’t accrue, which means your progress will be more substantial.
There’s no set amount of debt for you to have to complete a balance transfer. If you have to pay a transfer fee, calculate that fee and consider whether you’re going to save more by completing the transfer, or if it makes more financial sense to leave the debt where it is.
What does a balance transfer cost?
Balance transfers typically come with a balance transfer fee that is a percentage of the amount you transfer. The fee can range from 0%-5%, but is usually 3%. So, a $3,000 transfer to a card with a 3% balance transfer fee would be charged a $90 fee. It is possible to find cards with no balance transfer fee, but they most often have shorter intro periods than cards with balance transfer fees. Regarding other costs, balance transfer cards rarely have annual fees, but double-check before you apply since it really doesn’t make sense to do a transfer to a card with an annual fee.
How do I complete a balance transfer?
Balance transfers can be completed online, over the phone or in some cases with a balance transfer check. For all options, you will need the account number of the card with the debt as well as the amount you want to transfer. The easiest way to complete your transfer is online by simply logging in to your account, selecting your balance transfer offer and filling out the transfer request. The whole process shouldn’t take more than five minutes. If you prefer to speak to a representative to request your balance transfer, simply call the number on the back of your card. We’ve compiled individual guides on how to complete balance transfers with the major issuers like American Express, Discover, Capital One, Chase, Citi, Bank of America and HSBC.
What about those balance transfer checks I get in the mail?
Some credit card issuers will send you balance transfer checks in the mail. These checks are similar to regular checks, but instead of withdrawing money from your bank account, balance transfer checks withdraw money from your line of credit. You can use these checks to pay off debt from another credit card in two ways. Either write out a check to the company you owe money to or write a check out to yourself, deposit it into your account and pay off the lender. Be aware that not all balance transfer cards offer balance transfer checks and if they do, you may not receive them in time to qualify for the balance transfer offer. We recommend completing your balance transfer online or over the phone so you don’t miss out on the introductory offer.
How do I choose a balance transfer card?
Determine your goals. Before you apply for a balance transfer card, it’s important to check out what your long-term goals are with the card. If you simply want to use the card to take advantage of the balance transfer offer and nothing else, then you may be fine with a basic balance transfer card that doesn’t offer much beyond a 0% intro APR period. However, if you plan on opening a balance transfer card to transfer debt and make new purchases, you may want to check out cards that offer rewards or 0% intro APR periods for purchases.
Decide how much you plan on transferring. Once you’ve decided what your goals are, decide how much debt you plan on transferring. If you have several cards with debt, add up the debt to calculate the total you plan to transfer. Keep in mind you may not be able to transfer everything since some cards set limits on balance transfers.
Read the fine print. Some balance transfer cards state there are no interest charges if you pay your balance in full by the end of the intro period, but if you don’t, you will be charged all the interest accrued during the intro period (called deferred interest). This is something to be aware of in case you are unable to pay your balance before the intro period ends, however most cards from major issuers don’t charge deferred interest. Another key term to read is the time period you have to complete a balance transfer. Typically, cards give you 30-60 days from the account opening to transfer any balances, but some may give more or less. If you miss the window, you’ll forfeit the balance transfer offer — so make sure to check your cardholder agreement.
Crunch the numbers. It’s important to consider several terms and fees before selecting a balance transfer card. Check to see if your card has a balance transfer fee and what it will cost you to transfer your balance. Then, look at how long the intro period is so you can plan how much you need to pay each month to have a $0 balance when the intro period ends. You may realize you need more time than you thought. Also, consider what it costs to carry a balance post intro period (look for the ongoing APR) in case you are unable to pay off your debt during the term limit. Lastly, consider the cost of any new purchases you make since there may not be an intro period for purchases and this can add to your debt.
Compare balance transfer credit cards
With so many factors to consider, it can be confusing to settle on a card. So, we’ve rounded up three great offers currently available that can provide you the opportunity to get out of debt. All of the cards listed below have no annual fee — allowing you to minimize the cost of your balance transfer. And, some cards even have the hard-to-find $0 balance transfer fee.
The Amex EveryDay® Credit Card from American Express: The Amex EveryDay® Credit Card from American Express is an overall great choice if you’re looking for a balance transfer card. You can benefit from an intro 0% for 15 Months on balance transfers (after, 14.99% - 25.99% Variable APR) as well as a hard-to-find $0 balance transfer fee. Transfers must be made within 60 days of account opening to qualify for the intro offer. Another great perk is the rewards program where you earn 2x points at US supermarkets, on up to $6,000 per year in purchases (then 1x), 1x points on other purchases.
The information related to The Amex EveryDay® Credit Card from American Express has been collected by CompareCards and has not been reviewed or provided by the issuer of this card prior to publication.
Chase Slate®: The Chase Slate® is a relatively bare-bones card that is primarily designed for balance transfers. You won’t find a rewards program or other noteworthy perks, but there’s a competitive 0% Intro APR on Balance Transfers for 15 months with 17.24% - 25.99% Variable APR after the intro period). There is also a helpful Intro $0 on transfers made within 60 days of account opening. After that: Either $5 or 5%, whichever is greater.
The information related to the Chase Slate® has been collected by CompareCards and has not been reviewed or provided by the issuer of this card prior to publication.
Citi® Diamond Preferred® Card: With one of the longest intro periods in the market, the Citi® Diamond Preferred® Card is a great choice if you need a long time to pay off transferred debt. There is an intro 0%* for 18 months on Balance Transfers* (after, 15.24% - 25.24%* (Variable) APR). While that’s a long time to pay off debt, be aware of the balance transfer fee — 5% of each balance transfer; $5 minimum.
The information related to the Citi® Diamond Preferred® Card has been collected by CompareCards and has not been reviewed or provided by the issuer of this card prior to publication.
Read our roundup of the best balance transfer credit cards.