Dealing with several different debts at the same time can be quite challenging. Keeping track of the various interest rates, monthly payment schedules, pitfalls, and terms of each loan can almost be as much of a nightmare as the debt itself. Wouldn’t it be so much easier if you could simply lump what you owe into one giant pile? You’d be able to quickly and easily assess how much you owe, who you owe it to, and when it’s due.
If that sounds appealing to you, you might be someone who would benefit from utilizing a balance transfer card! But let’s slow down a little bit. Balance transfer cards, like most financial products, are a delicate balance of benefits and potential risks. You must fully understand what you’re getting into before committing to any financial product. So let’s start simple: What is a balance transfer card, and who can it help? Could it help you?
What is a Balance Transfer Card?
Balance transfer cards are a specific type of credit card that allow you to combine your debts from multiple loans or credit cards into one account. These unique cards will often enable you to reduce numerous payments down to one (or just a handful). They also often offer a few months interest-free, as a way to encourage you to move your balances to their institution. Some cards even provide more than a year APR-free as a promotion (one of our picks offers 21 months interest-free). It’s these cards that give you the most significant head start on getting your principal balance under control.
It’s not all roses, though. Balance transfer cards often come with a one-time transaction fee (usually called a balance transfer fee). So be sure that if you sign up, what you’ll save in interest will exceed what you spend on the fee. It can also take a few weeks to transfer a balance, so you’ll need to keep up on payments in the interim (or risk harming your credit). But we’ll touch more on making sure balance transfer fees aren’t excessive later.
What Happens When You Switch Over
Once you transfer a balance from your other cards, those cards will be clear of any debt. Upon the account opening, all debts will instead be found on the new card and will combine into a single balance. This also means all the debt will now be charged at the transfer APR, rather than your previous rates. If you’ve signed up at a promotional rate, that debt will have 0% APR for the duration of the introductory period promotion. At this point, it won’t be accumulating any interest.
Now let’s go into a little bit more detail about exactly how balance transfer cards work. What does a promotional period look like? How much are balance transfer fees? What is the APR on balance transfers? Are there no-fee balance transfer cards? How good are the introductory offer and introductory rate? And what kind of credit do you need to be approved?
Introductory Offers and Promotional Periods
Many balance transfer cards offer appealing introductory rates to draw in customers. This can (and should) be used to your advantage!
Traditional credit cards often have double-digit interest rates following their APR promotional periods. Unfortunately, these periods generally end before your debt has accumulated. Balance transfer cards offer you a chance to “relive” your promotional period and keep the whole of your account balances together with as low as 0% APR for a year, or even more. In essence: they let you take advantage of the 0% APR you had on your card back before it was maxed out.
That means that for more than a year, you’ll have a chance to get back on your feet. During that span, you’ll be able to make a payment directly onto the principal balance owed instead of trying to outrun the accumulation of interest on your debt. This is a big part of what makes balance transfer cards so appealing to consumers: they’re a bit like a grace period to get you ahead on your debt. The transfer offer can give you a great shot at recovery.
What Types of Debt Are Eligible?
This can be for all sorts of debt: from auto loans, student loans, and even credit card debt. As long as it fits within your credit limit, it can be combined. However, it may not necessarily be the best idea to bundle particular debts onto the card. Which types of debt you should bundle, and what amounts are appropriate, depends. But more on that later.
This kind of transfer opportunity might not seem like that big of a deal, but think about it more concretely. If you have credit card debt of $10,000, a year of promotional APR at 0% can save you roughly $2,500 in interest (assuming your other cards average a 24.99% APR). That $2,500 can pay more than a quarter of your principal debt – not bad for just changing who owns your debt!
Balance Transfer Fees
Balance transfer cards do sometimes assess a balance transfer fee. These fees are typically only applied once (not monthly or yearly). They’re added at the time of the transfer as a percentage of the transferred debt. They usually range anywhere from 1-5% and cover the risk the company takes on from your debt (i.e., it’s their incentive to help you).
Make sure, when considering using a balance transfer card, that you aren’t paying more in transfer fees than you would be in interest otherwise. Part of what makes a balance transfer card worth the investment is saving money on APR.
So if the balance transfer puts you in the red, it might not be worth your time. It’s also important to remember: these fees are only applicable once, but usually per transfer, which means the number of transfers you plan to conduct matters. Tread carefully!
Credit Limit
Balance transfer amounts aren’t limitless. If your debt is too high, you won’t necessarily be able to lump it all together. You can only transfer the amount of debt that meets or is below the card’s limit. Like other credit cards, the credit limit is set by factors such as your credit history, income, and other measures of financial reliability. So no, you probably won’t be able to transfer a balance in the amount of your entire student loan onto your card. But your auto loan? It all depends.
This is especially the case if you have poor credit or low income. If either of these is on your application, you may not be able to receive a limit large enough to lump all of your debt together. Still – even if this is the case, balance transfer cards can help you reduce the number of bills and amount of interest you need to manage. Cutting down on this reduces the chance you’ll miss a monthly payment or accumulate debt faster than you can pay it. Keep in mind that a balance transfer card doesn’t necessarily need to encompass all of your debt to help you out.
Credit Requirements
Like any credit card, balance transfer cards have requirements for approval. If your debt has done severe damage to your credit score, this can be a challenge. Though some options exist for people with fair credit, very poor credit may be a problem.
That’s fairly ironic, of course. After all, part of why you might want a balance transfer card is to get a handle on your debt, especially if it’s killing your credit score. But don’t despair – there are ways to improve your score enough to qualify for a balance transfer card.
If you’re interested in a balance transfer card, but your score is too low to qualify, take the time and build up your score in other ways. Since debt is the problem, it’s challenging to lower your credit utilization (one thing that can improve your score). However, there are a few things that you can do. Here are some of the easiest ways to improve your credit score and get it up to par.
Don’t Close Old Accounts and Keep Them in Good Standing
It might be tempting to close accounts you don’t use very often. After all, they’re just cluttering up your wallet, your inbox, and your life. But it’s critical, to build your credit, that you keep those accounts active and in good standing. So if you’re looking to improve your score, don’t close any older accounts (the older your score, the better!). Be sure you’re using them and keeping them up to date.
Those with an older average account age see improvements in their scores faster. It can be valuable to hold onto aged cards, so long as they aren’t actively damaging your profile. For instance, if you’re tempted to spend money you don’t have. Unless there’s a compelling reason, it’s best to keep them around to help pull your score up.
Avoid Applying for Other Credit
It might be tempting to keep applying for good balance transfer credit cards, even if you don’t qualify. After all, surely at least one will work out, right? Isn’t that faster and easier than raising your credit score? No! In fact, that’s precisely what you shouldn’t be doing.
Allowing repeated applications and hard inquiries into your credit score looks bad to potential lenders. They will most often see it as a desperate move to get more cash – telling them implicitly that you’re in dire financial straits. This makes you seem like a desperate borrower who is unlikely to repay their debts. Ultimately, all you’re doing is making it increasingly unlikely you’re approved for any card, let alone those with higher credit requirements.
Limit credit applications to cards you think you’re eligible for and really want. Don’t be tempted to apply for every store credit card, every personal loan, and every line of credit sent your way. There’s a cost to you for doing so – otherwise, they wouldn’t reward you for doing it. Limit these extraneous lines of credit, not only to save you from the hard inquiries but also so your credit isn’t perpetually young.
Don’t Grow Your Debt
If you already have lots of debt, and you’re looking to improve your credit, you should do everything you can to keep your debt from growing. Your score will inch up, and even a dozen points can be the difference between approval and rejection. Avoid the temptation to continue spending, and steadily pay it down, reducing your credit utilization and helping to mend your score.
Wrapping It All Up
These tips may seem pretty straightforward, but you must keep an eye on your credit score, especially if you’re trying to make improvements. Credit Karma and Credit Sesame both offer free credit monitoring software that you can access at any time. Accounts with either can notify you (if you’d like) when your credit changes. It is also a good idea to check on your FICO score every so often.
The best thing you can do is keep an eye on your score, and address issues as they arise – rather than finding them out from a rejected credit card application. It’s much easier to scrub new issues or address early identity theft than it is to pick up the pieces later.
One final tip: if you’re concerned about your credit, don’t close your old credit cards once you’ve completed the balance transfer! Like we said before, the age of your credit plays a role in the evaluation of your score. The older your average account age, the better. So if you close old cards, your average account age will go down. Keep them if you can, to see the best returns for your credit.
Transfers
Most debts are transferable to a balance transfer credit card, but there are a few specific limitations. One such restriction is that a company usually won’t let you toss debt back and forth between two of their own cards. Keep that in mind when considering which balance transfer card might be right for you.
Other debts are optional but often ill-advised. Auto and student loans are also eligible, but a bit less popular. This is because loans typically have lower interest rates anyway. Even with an introductory 0% APR, if the balance isn’t paid in full once it ends, you could be looking at quadrupling your interest rate on the remaining balance. So be careful – only transfer debt with a low-interest rate if you intend to pay it off before the end of your promotional period. If you don’t before the regular transfer APR kicks in, you’ll be accumulating significantly more interest than if you had just left it alone.
Other than these simple rules, the balance transfers are reasonably straightforward and don’t have many restrictions. Keep your balance under your limit, and be smart about which debts you transfer, and it should work out well.
The Bottom Line
If you’re interested in rapidly paying off (or paying down) your debt, balance transfer cards can provide reasonably rapid improvement in your financial situation. However, you must remain committed to reducing your balance transfer card balance (as well as not racking up additional debt on your old accounts). This is the best-case scenario for balance transfer cards.
Just be careful not to fall back into old habits. It’s common for customers to transfer balances, then spend unwisely on the newly freed-up old card balance; Leaving them with twice the debt and none of the options. If you fear this might be a temptation – a balance transfer card may not be for you. We’ll talk more about this later when we discuss the possible pitfalls of balance transfer cards and what you should avoid.
Common Questions
It’s understandable if you still have questions. After all, these products can be challenging to understand, especially if you have little to no prior experience with financial products. Actively managing your finances requires quite a lot of learning – and so much of what’s available is hard to read jargon.
So, before we get to our recommendations, let’s answer some common questions about balance transfer cards in terms anyone can understand. Hopefully, that puts your mind at ease!
There are lots of questions people have about balance transfer credit cards, of course. Like how might balance transfer cards impact your credit? Why would these credit card companies offer a product that loses them money in interest? Is there a catch?
Let’s clear up some of these common concerns. That way, you can decide whether or not a balance transfer card is right for you and your finances!
Does Transferring a Balance to a Transfer Credit Card Impact Your Credit Score?
Yes and no! Transferring your balances isn’t what has an impact on your credit score: credit utilization, account age, and monthly payment history are. However, each of these things is impacted by balance transfers. As such, they do affect your credit score, just not directly.
Credit utilization is the percentage of your total available credit (all your credit limits added together) that you have already spent. So if you’ve maxed out all of your cards, you have a credit utilization of 100%. In this way, having another credit card helps to lower your credit utilization by increasing your available credit without increasing your balance. If this value goes down enough, it will eventually improve your score.
But that’s not the only effect you need to consider! A new card will also reduce your average account age. This is part of why getting new cards too often is ill-advised because they add a hard inquiry to your report. Both of these things can severely lower your score. So getting a balance transfer card can be a balancing act. For the best sense of how it may impact your credit, try using an online calculator to predict whether it would move your score up or down. One is readily available here.
Is it Worth it? Is There a Catch?
It all depends on how serious you are about paying your debt. As well as what the transfer APR of your new card is. Even if it saves you money (the transfer fee is lower than the APR on your old cards), but you’re tempted to max out the newly cleared cards. A balance transfer card – or any new credit card for that matter – is not what’s best for your financial health. Again, we’ll discuss this in more detail later.
But if you intend to pay off these debts fully and quickly, then balance transfer cards can be an excellent option. The promotional APR gives you plenty of space to get the principal down without racking up massive amounts of interest.
Too much interest is what eats up most of the payments you’re making, meaning very little of the principal is paid off at a time. This can often be the push you need to get on top of your debt, rather than just playing catch up. In these cases, it’s most definitely worth it.
You may be asking yourself if balance transfer cards are similar to rewards credit card that offers a rewards progam. Can you get a cash advance or earn cash with these cards? The point here is not to earn points when shopping at grocery stores, but to save money instead of getting cash back rewards.
Does Getting a Balance Transfer Card Automatically Close Your Other Cards?
No! Your other cards will remain open, and so long as that isn’t too much of a temptation, you should leave them open! We’ve harped on how the age of your credit is important quite a bit so far. That’s true here, too.
Closed accounts don’t count towards the age of your credit, so closing these accounts – especially without good reason – will only hurt your overall financial picture. They make you look like a younger borrower or a borrower who can’t commit to an account. So no, getting your balances transferred won’t automatically close the accounts – and, in fact, you should actually try to leave them open.
Once Your Promotional APR Expires, Can You Just Switch to Another Balance Transfer Card?
Yes, but remember, balance transfers aren’t free. Literally or for your credit.
If you ‘don’t pay down the principal and transfer your balance when the promotional period ends, you’ll incur a transfer fee every time. Those add up. Each increases the size of your debt, even if it’s not earning interest in the meantime. A fee of 5% on the full balance of your debt is costly, and each 5% fee is higher since it’s added to your debt every time.
Balance transfers can also lower your credit by reducing the average age of your credit and adding additional “hard checks” to your profile. Future lenders will be wary if they see this kind of behavior on your report – so be careful. It can hurt your ability to get new credit in the future.
Eventually, if you keep switching debt from card to card, your score will continue to drop. This will continue until you no longer qualify for any balance transfer cards, at which point you’re potentially stuck with an even higher transfer APR. So, don’t think that balance transfer cards are a permanent, rotating solution. Eventually, you’ll need to pay the debt. There’s no way out of that! Get ahead of it before you’ve potentially made things much worse for yourself.
Can You Keep Applying for Cards Until You Get One?
No! Don’t do this. We’ll mention this a couple more times because it’s so important. If you continue to apply for cards even though you know you don’t qualify, you’re making your chances of approval for any card (not just the more lucrative ones) lower. This is because your credit usually takes a hit with every line of credit you apply for.
Securing credit isn’t just a matter of sheer numbers. The best thing you can do for yourself is to only apply for lines of credit you’ve carefully researched and believe (based on your credit score and history) you’re qualified for. Anything else is not only a waste of time but also a possible black mark on your credit report.
The Possible Pitfalls of a Balance Transfer Card
Now that we’ve answered the common questions, there are still a few things you should consider before jumping headfirst into a balance transfer card. There are some more critical pitfalls you need to be aware of first. The best defense against making a mistake is knowing they exist!
We mentioned some of them earlier but will elaborate on them a bit more here. Balance transfer cards can be excellent tools. But for the wrong people, or in the wrong circumstances, they can be a terrible mistake, which worsens your debt situation and credit score. Here are three of the biggest pitfalls consumers accidentally trip into when they open a new balance transfer card.
They Don’t Avoid the Temptation to Continue Spending
The most common pitfall that people using balance transfer cards run into is essentially doubling their debt. As we mentioned earlier: the key to a balance transfer card working is making sure you don’t spend additional money on the cards whose balances you’ve cleared.
It can be tempting to do so. If you’re struggling to make ends meet, having huge spates of “free” money on cards is alluring. When you transfer your debts to a 0% APR card, it can feel like you’re effectively doubling the money you can spend. However, it’s vital to remember that it would actually mean doubling your debt. So if you’re not sure you can resist spending free credit, a balance transfer credit card may not be for you. It may – in fact – even make your problems worse.
Make sure you can commit to repaying your debt before you start moving it onto cards with a potentially higher transfer APR. This is especially true while you’re simultaneously racking up transfer fees. You’ll hear us repeat that a lot. It’s important to remember! If you do this, you’re your own worst enemy!
Balance Transfers APR Rates are More Expensive Than Their Current APR
If your principal balance is particularly high (especially if it has a reasonably low-interest rate), a balance transfer card may increase your problems. Consider, for instance, a student loan of $40,000 with an APR of roughly 5-6% (this is pretty standard for unsubsidized student loans).
With a principal balance that high, you’re unlikely to pay the entire debt off before the promotional period expires. Either way, you’ll be paying a balance transfer fee between 1-5%, which is equivalent to a year of interest at 5% APR. However, given the size of the loan, you may very well end up paying interest much higher your initial terms of the loan.
Neither of these things is particularly helpful! Leave your student loan debt where it is. The same (generally) goes for auto loans and other large sums. If it’s an unwieldy, large sum, it pays to do some serious thinking before you commit to the higher standard APR on a balance transfer credit card.
Which brings us to our last pitfall.
They Let the Promotional APR Expire When They Didn’t Intend To
One of the most significant risks of a balance transfer card is forgoing our above advice and ending up with an APR worse than when you started. This is especially true if you haven’t made much progress on the debt by the time the promotion expires. That’s part of why we’ve included a post-promotional APR rate in our “best of” ratings below. We advise against changing cards to a higher APR unless you think you can completely (or at least mostly) pay off the principal during the promotional period.
Using our student loan example above, you can see that substantial amounts are also ill-suited for balance transfer cards for this reason. They’re likely to go on past the promotional period and accumulate much more interest than if they’d just been left alone. And remember: it’s not as easy as just switching back and forth between balance cards. There are costs for that too, which we discussed in our FAQ. So be sure you check the math of whatever transfer APR you’re considering. This is especially vital since these agreements are not super easy to get out of.
Common Mistakes
Though we won’t go into painstaking detail about every pitfall, there are a couple more we’ll list out here for posterity’s sake. Make sure you keep this in mind when you decide whether or not a balance transfer credit card is right for you.
It’s a mistake to:
- hop between balance transfer cards;
- keep applying for cards after being rejected;
- try to get cards that are “out of your league;”
We’ll discuss all of these pitfalls pretty frequently throughout this article. That’s because they’re critical to remember. Your balance transfer card only works as well as your overall debt management strategy. Be sure you have a plan before you commit to any financial product: you don’t need to be an expert, just reasonably informed. We’re not here to sell you on any particular balance transfer card, but rather to inform you about when they are and aren’t, useful. So be careful!
The Best Balance Transfer Cards for Your Credit
If we haven’t scared you away, you’ve probably decided these cards might work for you. So if you’re still on board with getting a balance transfer card, we’re happy to help you find the one that’s right for you.
Now, remember, different credit scores will earn you different perks from the various lenders. As you’d imagine, better scores will earn you better perks. Even though it’s tempting to apply for cards with stellar perks, make sure you’re applying within the right range. Otherwise, you risk an obvious rejection and needless “hard pull” on your credit report.
Again, that’s crucial because even when rejected, credit checks stay on your report. It’s absolutely critical to limit your search to cards that are within your wheelhouse! Otherwise, you’re putting yourself at major risk for a check that hurts your credit and doesn’t get you a card.
In that spirit: here are our picks for the best balance transfer cards at nearly every credit level.
Exceptional Credit (800-850)
If you have credit in this range, you’re unlikely to find yourself in need of a balance transfer credit card. That said, if you are in the market for one, with a credit score this high, any credit card on the following list will likely be available to you.
Peruse the benefits of every other recommendation, and take your pick based on which one best fits your needs. Lenders are eager to lend to borrowers in this range since they’ve demonstrated excellent credit management and are a known quantity. The balance transfer card world is your oyster.
Very Good Credit (740-799)
People with ‘very good’ credit will have the cream of the crop available to them. These are the balance transfer cards with the lowest post-promotional APR, the highest credit limits, the best perks, and the easiest approval process. You’re a trustworthy borrower.
Here are some of the best balance transfer credit cards on the market! They’re likely all within your reach.
BankAmericard® Credit Card
- Best Features: No Annual Fee, Free Balance Transfers (for the first 60 days), Long Promotional APR Period
- Drawbacks: Higher Standard APR
With no annual fee, a relatively standard post-promotional APR, and a long introductory APR period, Bank of America’s BankAmericard® is a meat-and-potatoes balance transfer card with a waived transfer fee for the first two months.
The card also offers a promotional period longer than many of its competitors, and clear benefits (like no penalty APR) with a standard set of post-promotional period attractions. Though it doesn’t offer anything particularly stunning or revolutionary, it’s a solid card. It does exactly what’s advertised, with the added bonus of no early balance transfer fees.
- Annual Fee: $0 a year
- Balance Transfer Fee: $0 for the first 60 days; 3% per transaction afterward (with a minimum of $10)
- Penalty APR: No
- Promotional APR: 0% for the first 15 months
- Standard Variable APR: 15.24% – 25.24%
Simmons Visa Credit Card
- Best Features: No Annual Fee, Average Promotional APR Period, and Low Post-Promotional APR
- Drawbacks: Shorter Promotional APR Period
While the Simmons Visa has a shorter promotional period than Bank of America’s BankAmericard®, and lacks free transfer fee waivers, it has a stellar standard APR. If you’re unsure whether you’ll be able to pay off your debt within the promotional period completely, this card is the way to go. It’ll nearly cut in half the interest accumulated on your remaining principal, and it isn’t variable, the way many other rates on this list are.
Further, the balance transfer fee is reasonable, and there’s no annual fee – meaning there isn’t a catch for that incredible standard APR.
- Annual Fee: $0 a year
- Balance Transfer Fee: 3% per transaction afterward (with a minimum of $10)
- Penalty APR: No
- Promotional APR: 0% for the first 12 months
- Standard APR: 10.25%
Good Credit (670-739)
You might find your options are a bit more limited than your high credit peers if you have “good” credit – but you should still have a fair number of options to choose from. Again, don’t be surprised to see a slightly higher APR, smaller credit limits, shorter promotional periods, and an application process that’s a bit more in-depth.
Depending on where you are in your credit journey, this may be the best score you can realistically achieve. Young borrowers, in particular, struggle to break out of this category since they don’t have much of a credit history yet. Since credit age is a big part of your score, that’s just tough luck. Don’t be discouraged if you’re sitting solidly in this category! You may not actually be doing anything wrong, and it may just be a waiting game.
Here are our top picks for balance transfer cards that work well for people with “good” credit.
Amex EveryDay Credit Card
- Best Features: No Annual Fee, Free Balance Transfers, and a Long Promotional APR Period
- Drawbacks: High Penalty APR
Free of an annual fee, offering balance transfers entirely without cost, and serving up a long promotional APR are some of the biggest perks of the Amex EveryDay card.
Though the perks are sizable, be careful of the penalty APR, which can hit 29.99% after your first late monthly payment. This is the type of card you definitely want to set up autopay on. That said, the standard APR on the Amex EveryDay is among the lowest of any balance transfer card. So the value of cutting balance transfer fees might be high for those with lots of debts they’re looking to consolidate. Just make sure you use this card carefully and responsibly, and it will serve you well.
- Annual Fee: $0 a year
- Balance Transfer Fee: $0
- Penalty APR: 29.99%
- Promotional APR: 0% for the first 15 months
- Standard Variable APR: 14.99% – 25.99
Discover It® Balance Transfer Credit Card
- Best Features: No Annual Fee, Extra-Long Promotional APR Period
- Drawbacks: High Balance Transfer Fees
The Discover It Balance Transfer Credit Card offers quite a few benefits for cardmembers. No annual fee, a low transfer fee for the first few months with the card, and no penalty APR are just a few they offer.
This card also offers a sizeable promotional APR period, making it easy to get a jump on your principal balance. As such, the Discover It Balance Transfer card is a good option for those looking for a longer promotional period and some initial balance transfer fee perks.
- Annual Fee: $0 a year
- Balance Transfer Fee: Initially 3%, rises to 5% in the future
- Penalty APR: No
- Promotional APR: 0% for the first 18 months
- Standard Variable APR: 14.24% – 25.23%
Chase Freedom Unlimited Credit Card
- Best Features: No Annual Fee, Long Promotional APR Period
- Drawbacks: Higher Post-Promotional APR
Similar to the Discover It Balance Transfer card, but with a slightly higher standard APR (and lower balance transfer fee). The Chase Freedom Unlimited card is a particularly good option for anyone looking to make multiple balance transfers but doesn’t want to be hit by the associated fees.
The Freedom Unlimited offers a long promotional APR which makes it another good option for those hoping to whittle down their principal balance before resuming the accumulation of interest.
- Annual Fee: $0 a year
- Balance Transfer Fee: 3% per transaction (with a minimum of $5)
- Penalty APR: No
- Promotional APR: 0% for the first 15 months
- Standard Variable APR: 17.24% – 25.99%
Citi Simplicity® Credit Card
- Best Features: No Annual Fee, Extra-Long Promotional APR Period (the best of our picks)
- Drawbacks: High Balance Transfer Fees, Higher Post-Promotional APR
The Citi Simplicity Card has an incredible promotional APR. The balance transfer fees are slightly higher than competitors but can be partially made up for with long-term 0% promotional APR. There is no penalty APR (late fees) for late-payments and no annual fee for membership.
The standard APR is also a little bit higher than other options, however. So if you don’t think you’ll be able to clear your debt before the end of the promotional APR, you might want to skip this one.
- Annual Fee: $0 a year
- Balance Transfer Fee: 5% per transaction (with a minimum of $5)
- Penalty APR: No
- Promotional APR: 0% for the first 21 months, for balance transfers during the first four months
- Standard Variable APR: 16.74% – 26.74%
Average/Fair Credit (580-669)
This is where it may begin to get dicey if you’re hunting for balance transfer cards. Fair credit score borrowers are going to have trouble finding balance transfer cards with the perks we’ve mentioned above. This means you may need to settle for a shorter promotional APR period, a higher standard APR, low credit limits, and potential deposit requirements.
Don’t turn away from balance transfer cards just yet, though. They might still be able to help you get your ducks in a row. It’s just going to be a little bit more of a search. Here are some of the best options for people whose credit is just “average.”
USAA Rate Advantage Platinum Visa
- Best Features: No Annual Fee, Potential for Lower Standard APR
- Drawbacks: No Promotional APR
This USAA Rate Advantage Platinum Visa doesn’t offer a promotional APR period. As such, it’s usually only a good option for those seeking to lower exorbitantly high APR rates from other cards. If you’re looking to get a jump start on paying your debt with promotional APR, then this Visa won’t help you. But if you’re just looking to knock down your APR and transfer to a more manageable rate, it may.
- Annual Fee: $0
- Balance Transfer Fee: 3% per transaction
- Penalty APR: No
- Promotional APR: 9.15% – 26.15%
- Standard Variable APR: 9.15% – 26.15%
Aspire Platinum Credit Card
- Best Features: No Annual Fee, Low Balance Transfer Fee, Low Post-Promotional APR
- Drawbacks: Shorter Promotional APR Period
With an incredibly low standard APR, six months of promotional APR, and low balance transfer fees, the Aspire Platinum Credit Card is an excellent way to get your debt under control. The duration of the promotional APR is a bit shorter than its competitors. However, its availability to those of average credit, lower balance transfer fees, and competitive standard variable APR make it a great option.
- Annual Fee: $0
- Balance Transfer Fee: 2% per transaction (with a minimum of $5)
- Penalty APR: No
- Promotional APR: 0% for the first six billing cycles
- Standard Variable APR: 8.90% – 18.00%
Amalgamated Bank of Chicago (ABOC) Platinum Rewards Mastercard
- Best Features: No Annual Fee, Long Promotional APR Period
- Drawbacks: Promotional APR Period is short compared to cards for better credit scores
This card is for those with average credit who are less worried about standard variable APR, and would rather have a longer promotional APR. The ABOC Platinum Rewards Mastercard has a 12 month promotional period with no penalty APR, a modest balance transfer fee, and a very standard post-promotional APR. The ABOC card is comparable to many balance transfer cards offered to those with “good” credit, so keep it in mind.
- Annual Fee: $0
- Balance Transfer Fee: 3% per transaction (with a minimum of $5)
- Penalty APR: No
- Promotional APR: 0% for the first 12 months
- Standard Variable APR: 15.15% – 25.15%
Very Poor Credit (300-579)
Unfortunately, if your credit score is sitting in this final category, you’re unlikely to find a lender willing to give you a balance transfer credit card. Even finding a standard credit card is challenging at this level. This is when credit building will become crucial to future financial success. As we mentioned above, if your credit isn’t quite up to snuff, all hope is not lost – but it will take a little bit of work to get there.
What You Can Do
Continue making your every payment on time, and taking care of any overdue bills is a great place to start. It’s also important to stop applying for credit cards if you don’t think you’ll be approved. Like we keep saying, each application is a hard credit pull on your report – after a handful of these checks, they begin to affect your credit negatively. So it’s better to wait than to take a long-shot.
This isn’t for no reason. If you’re consistently applying for credit, lenders may see it as credit-seeking. This tells them you may be financially desperate (and therefore, not an ideal borrower for them). People who are desperate for credit are less likely to pay it back.
With some patience and strategy, even a credit score marred by bankruptcy, overdue bills, and frequent credit-pulls can eventually be repaired. Just be patient, diligent, and focused! The worst thing you can do is give up and let the debt swallow you. The longer you wait, the harder it is to recover. So the best time to start is always immediately.
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Honorable Mentions
There are plenty of cards worth your attention. Just because they didn’t make our “best of” list doesn’t necessarily mean they aren’t good options. If you’re not finding the card that fits your lifestyle above, check out our honorable mentions to see if any of them better suit your needs. These cards are generally best for “good” credit and up – so keep that in mind when you’re browsing. The options for lower levels of credit tend to be more limited, so we don’t have any additional offerings there.
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Capital One® Quicksilver® Cash Rewards Credit Card
- Best Features: No Annual Fee, Free Balance Transfers (after Promotional APR Expires), Long Promotional APR Period
- Drawbacks: Higher Standard APR
Why it Didn’t Make the Cut
Though this Capital One offering has some decent benefits, it wasn’t a standout in any particular area. It doesn’t boast a super long promotional period or low post-promotional APR to go along with its average balance transfer fee. If the cards above aren’t for you, this may still be worth a look. This is especially true if you’re only interested in reducing the number of payments you’re making, as post-promotional APR balance transfers are entirely free. There’s nothing wrong with this card at all – it simply wasn’t a standout.
- Annual Fee: $0
- Balance Transfer Fee: 3% per transaction (first 15 months); none after the expiration of the promotional APR
- Penalty APR: No
- Promotional APR: 0% for the first 15 months
- Standard APR: 16.24%, 22.24%, or 26.24%
Capital One® SavorOne℠ Cash Rewards Credit Card
- Best Features: No Annual Fee, Free Balance Transfers (after promotional APR expires), Long Promotional APR Period
- Drawbacks: Higher Standard APR
Why it Didn’t Make the Cut
This Capital One SavorOne℠ Cash Rewards Credit Card has almost exactly the same perks as the Capital One® Quicksilver® Cash Rewards Credit Card. This makes it useful in the same circumstances, and equally as serviceable. In part, having multiple cards with the same rewards makes neither card seem particularly appealing or unique for consumers. This played a small role in deciding against including them (after all, how could we pick which one was best?), but mostly, it was the lack of notable, stellar perks.
- Annual Fee: $0
- Balance Transfer Fee: 3% per transaction (first 15 months); none after the expiration of the promotional APR
- Penalty APR: No
- Promotional APR: 0% for the first 15 months
- Standard APR: 16.24%, 22.24%, or 26.24%
HSBC Gold Mastercard® Credit Card
- Best Features: No Annual Fee, Long Promotional APR Period
- Drawbacks: High Balance Transfer Fees, Balance Transfers Must Be Completed in the First 60 Days
Why it Didn’t Make the Cut
Though the HSBC card has some pretty impressive benefits, users rated this card the lowest of the bunch, coming in at roughly 1.8 stars out of 5. No matter how impressive a card looks on paper, if customers have had a less than ideal experience with it, it shouldn’t make the cut. Make sure you keep tabs on consumer reviews for cards just in case the customer service associated with all kinds of great perks isn’t up to snuff. Unfortunately, for this impressive little card, consumers just weren’t stoked.
- Annual Fee: $0
- Balance Transfer Fee: 4% per transaction (with a minimum of $10); be careful, they must happen in the first 60 days.
- Penalty APR: No
- Promotional APR: 0% for the first 18 months
- Standard APR: 13.24%, 17.24% or 21.24%
An Example
This can all be pretty exhausting and seem super abstract. So let’s go through one full example to give you a sense of how a balance transfer credit card would work for you.
Let’s say you have $5,000 in credit card debt. This is distributed roughly evenly across four cards – none of which are with the bank you’ve chosen to get your balance transfer credit card through. Remember, you typically can’t get a balance transfer card with the same bank you’re looking to transfer debt from.
Let’s make things simple and say that for your balance transfer card, your promotional APR lasts 12 months. If your APR on your old card is 20%, then the number we need to beat to make it worth your while is $1,000 worth of interest in 12 months.
That means that if you pay the credit card balance off in the first year of ownership, you will have saved yourself $1,000 in interest costs. That could easily have eaten up all of your minimum payments, and a fair amount of larger payments, as well. So if you intend to pay back the entire value of the credit card balance, then it’s an obvious win.
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The Breakdown
But before you get too excited, remember that you pay balance transfer costs, too. In this case, let’s say it’s 5% per transaction. Four transactions, at $250 worth of debt on each card, means that you’ll be paying $50 in balance transfer fees. That means you’re still up $950 in savings. Awesome! No worries, then.
So when wouldn’t this be worth it? Well, let’s say that – following the promotional period – your APR is higher than on your old card, sitting at 25%. If you didn’t pay off any of the $5,000 debt during the promotional period, it’s going to keep eating away at you, costing an extra $250 in interest in JUST the first year. So be careful! If you let the debt continue to sit, you’ll eventually end up paying more in balance transfer fees, higher APR, and other associated costs than you would have by just leaving everything alone.
Debt Management Alternatives
Maybe none of these cards look right for you. Maybe, after reading our warnings, you’ve decided that the risks are just too high or the benefits too slim. How else might you be able to get your debt under control? Are there other ways to get a handle on your debt that doesn’t involve just ignoring it and hoping it will eventually go away?
There are some. The right answer is never just to ignore your financial woes. Here are a few alternatives to balance transfer credit cards in case they aren’t for you.
Pay Past Interest to the Principal
Even if balance transfer credit cards aren’t for you, you can make steady progress towards resolving your debts. One of the best ways is by making more than the minimum payment on credit cards and loans. If you’re just barely keeping up with minimum payments, you’re probably only just meeting (or even falling behind) the accumulation of interest. This makes it impossible ever to pay off the debt.
If you are making enough to budget and put more money towards your debts, this is the strategy that will pay off the most in the long-run. Bankruptcy, debt management, and debt settlement can all make it more difficult for you to receive credit in the future. Alternatively, you can build your credit by paying past the minimum payment and whittling down your debt.
If you can afford it, this is the best alternative for your future financial health.
Renegotiate Your Debts (Debt Settlement)
Another strategy that can sometimes pay off is called ‘debt settlement.’
Debt settlement is a strategy to pay off your debt for a fraction of its original value. It’s typically settled with whoever the debt is owed to, and is sometimes the right choice for the company in question. The bottom line is, seeing a portion of the debt paid is better than consistently having an entirely unpaid debt on the books.
The catch is that this marks you as an unreliable borrower for several years. Your credit score will also take a hit, making securing future credit difficult. For obvious reasons, lenders are cautious about you if you’ve paid your debt late and, then, only partially.
This method can do a number on your credit. This and some of the other options we’ve discussed are only good options if you’ve exhausted the options which preserve your ability to borrow. Many of these strategies, though effective last resorts, ruin your ability to borrow for years.
Talk to a Non-Profit (Debt Management)
Debt management is another strategy.
Debt management makes payments more affordable and manageable. You typically work with a financial counselor to determine what you can afford and negotiate lower interest terms on your current debt with whoever owns it. Your counselor will help negotiate the terms on your behalf.
Sounds great, right? You get to negotiate your way down to a lower rate!
Well, it’s not quite that easy. In addition to mandatory autopayments (your bank information is part of the deal), you are also often forbidden from having any other credit. This means that during your repayment period, you sometimes can’t have credit cards or loans. This can be especially challenging if you use credit cards to bridge the gap between paychecks, or need credit cards for certain online purchases.
If you’re unable to go for the duration of the repayment plan without credit, debt management may not be for you.
Declare Bankruptcy
If all else fails, and none of the above options are possible for you, you can declare bankruptcy.
Though bankruptcy frees you of many (though not necessarily all) debts, it also absolutely decimates your credit score. Bankruptcy is a last resort option. It’s a grueling process that uproots your life and makes it incredibly difficult to get credit for between seven and ten years after filing.
If you’re considering filing for bankruptcy, be sure to consult a financial expert, and give your decision a lot of thought. It’s a long road to recovery after filing bankruptcy – and it won’t even necessarily get rid of all of your debts. Student loans, for instance, are not wiped clean. Nor are things like alimony or child support.
Final Thoughts
Balance transfer cards can be complicated. Balance transfer card brochures are filled with language about promotional APRs, penalty APRs, promotional APR term-length, and balance transfer fees. But these terms aren’t everyday language – and it’s vital that you, as the consumer, take the time to learn what they mean.
Approaching balance transfer cards without this knowledge can be thorny and dangerous. Especially since balance transfer cards aren’t necessarily the best fit for everyone. For a balance transfer card to work, you need to be disciplined, dedicated, and responsible about making your payment schedule consistent. The perks of these cards are contingent on maintaining this attitude.
They can also enable customers to continue spending with abandon. So if you aren’t knowledgeable and diligent, they may leave you in a worse situation than when you began. This is especially true if the APR on your new card is higher than your old credit card. That’s why it’s crucial that you seriously evaluate your goals and set up some rules before you get started with balance transfer cards. Cavalier attitudes and misunderstandings about terms can mean balance transfer cards will only make things worse – so be careful!
That said, these cards can be a valuable tool for taking a serious swipe at the debt you’ve accumulated. They allow you to make your debt interest free for the duration of the promotional period. This provides consumers a chance to make a serious effort to cut down their principal debt without playing catchup on interest.
What Do You Think?
If you can make serious progress towards paying off your debt by being smart about which debts you move, balance transfer cards can be fantastic. These credit cards are an excellent option for getting debt under control. Otherwise, one of the other methods – like debt settlement, debt management, or declaring bankruptcy – may be the more fiscally responsible option.
What do you think about balance transfer cards? Have you had one? Do you plan to get one? What types and sizes of debts would you move onto it? Does it all sound too good to be true, or are you worried about making things worse? Sound off in the comments below!
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