For many people, surviving without a credit card is like swimming in the open waters without any protective gear. These simple pieces of plastic have become a crucial part of most people’s lives that lack of one is almost unimaginable. You might be reading this and nodding in agreement as you feel your cards in the purse or wallet. From students to travel cards, the world is full of many options.
One feature that helps you to enjoy the card to maximum is the balance transfer feature. This is where you’re able to move the debt balance from one card onto a new one. Sounds like a dream? Well, it’s true that you can do this and without clearing the outstanding balance first. The reason why taking advantage of the balance transfer is beneficial is you get 0% interest charged on the balance owed once transferred.
Imagine not having to pay even a single cent in interest on the owed sum for up to 21 months! You can use this offer to save some money. Before you go jumping up and down as you sign over the debt to another card, understand what all this entails and make a smart choice. Remember, they might not tell you but the Credit Card Company or banks must benefit from this as well.
How Balance Transfer Works
Transferring debt that you owe from one card to another enables you to start using the new card even before clearing what you owe. The reason you might opt for this is to take advantage of the lowered interest rate and reduced penalties offered to you. This might even come with more packs like travel miles that you definitely might require as an avid traveler!
It has become the norm for credit card companies to offer their customers an opportunity to acquire a balance transfer card. They do this in a subtle way that makes you feel you must get this for the added benefits that come with the new card. Who doesn’t want withdrawal of interest on money for next year? But, there’s a point to keep in mind as this is not all roses.
Once you opt to transfer the balance from your old card onto a new one, you can forget about the grace period you had on it. With the new card, monthly payments start immediately and with new purchases might come added interest rate charged on them. This is what most credit card companies write in the fine print and not boldly on the papers you sign.
When that smiling sales lady or gentleman presents you with those papers, be diligent. Take a moment to read through all that is on the papers even though it might take time. A witty person can take full advantage of this and request better interest rates on new purchases. This saves you money and peace of mind when you get the new bill.
Pros of Balance Transfer Cards
As earlier stated, balance transfer cards can be quite beneficial to you if you take time to read the fine print and get better terms.
1. Lower Interest Rate Charged
When you decide to transfer that balance to a new card that comes with a 0% interest rate on the previous balance, you reduce the overall amount you owed. If, for example, you opt to transfer $6000 from the old card, it comes as that amount and not with the previous often higher interest rate. This makes it easier to meet the terms of the 0% rate. This means you can pay more if you want to dent the balance and clear it on time in the monthly charges.
2. Consolidating Debt
You know that having all those cards in your wallet from different companies is not the best financial decision. The truth is you might have more than you need and incur unnecessary debt as a result. The time to do something about it is now by consolidating all you owe into one card that you can plan to pay off. By moving all the balances to one new card, it’s easier to make better financial choices.
3. Better Interest Rate
Before you jump into this new information and get any card for the balance transfer, shop around for one with favorable terms. By doing this, it shows you care about your finances and want to clear the debt owed. There are cards that have good terms that help you to get out of debt faster.
Cons of Balance Transfers
1. The Balance Transfer Fees
Did you know that balance transfer incurs more charges in terms of transfer fees? Getting a balance transfer might seem like all roses, but there is a thorn to keep in mind. This service is not free and you must pay a fee for it. The fee is charged as a set percentage of every $1000 that you transfer. Some cards go further and charge you an annual fee as well.
Think through the whole process and not only the icing on the cake that the credit card company makes you admire. Do full calculations of what it shall cost you to transfer that balance into another card. That helps you determine whether it’s worth it or not. You might discover it’s cheaper to leave the balance as it is on the old card.
2. Increased Interest Rate
There is a catch on the fine print that the credit card company might not be too quick to point out. The 0% interest rate offered is promotional and not open to all their customers. Yes, you can transfer the money but still wind up paying the same high-interest rate. This is why it’s essential to read the whole document and ask questions. The fact is, you can only get this promotional interest rate if you have a high credit score. If not then you don’t qualify because there might be a risk of inability to pay.
3. Lowered Credit Score
Remember, applying for a new card means you are opening a new debt account which affects your credit score. Most likely with the balance transfer, soon the purchases made with the new one shall surpass the 30% of the credit limit. This results in your credit score dropping. However, this is not permanent as you can raise the score by paying off the balance.
Best Balance Transfer Cards
Weigh the pros and cons before making a decision. Still want to transfer that balance, then in this article, you will find the best balance transfer cards to use.
|Card Name||Intro Balance Transfer APR %||Balance Transfer Fee||Annual Fee||Credit Score||Regular Balance Transfer Rate %|
|Wells Fargo Platinum Card||0%||3% before 120 days elapse. 5% after||N/A||670>||15.49-24.99|
|Discover It Cash Back||0%||3% for initial transfer. 5% for any other transfer||N/A||670>||13.49-24.49|
|Citi Simplicity||0%||5% of the balance||N/A||670>||14.74-24.74|
|Chase Freedom Unlimited||0%||5% of the balance transferred||N/A||670>||16.49 – 25.24|
|Citi Diamond Preferred Card||0%||5% of the balance||N/A||670>||13.74%-23.74%|
|Amex Everyday Credit Card||0%||5% of the balance||N/A||670>||12.99-23.99|
1. Wells Fargo Platinum Card
This is one of the most coveted cards due to its long period at 0% rate charged once you transfer the balance from an old card to the new one. The duration is up to 18 months for as long as you qualify for this rate offer. The credit score required to get the 0% offer on the new card is 670 or higher. This means only those with an excellent score can take advantage of this. Without this score, you get the ongoing interest rate charged which is from 15.49% to 24.99%.
The transfer is not free and you must pay up a fee of 3% of the balance. This amount is payable in 120 days as per the terms of the company. After this time elapses, the fee jumps to 5% adding you more expenses. The good news is that you don’t get charged any annual fees. Another downside to the card is there are no rewards that you can look forward to.
- 0% interest on the balance transferred if you qualify
- No annual fee charged
- Free access to your FICO credit score
- Transfer fee charged
- High credit score required to qualify for the 0% rate
- High regular rate if you don’t qualify for the 0% offer
2. Discover It
If you qualify for the intro transfer 0% offer, you will enjoy this for the next 18 months. By taking advantage of the lowered cost, you can put a huge dent on your balance reducing the amount owed. It comes with a great offer where you earn a 5% cashback on every new purchase made with the card. This is limited to a maximum amount that is applicable quarterly.
Find out how much this is, before signing on the line. Discover It reward is available in selected places. There is a further 1% cash back that you earn from all other purchases made using this new card. The beauty of it is, there are no set expiration date for the reward. The credit score required is quite high from 670 to 850 to qualify for the 0% interest rate offer.
Anything lower than that gets you the regular rate of 13.49% to 24.49%. The intro balance transfer charges a fee of 3% and for future transfers, this amount rises to 5%. No annual fee is applicable here. But in case you have a low credit score, you can consider some of these lenders.
- Intro transfer rate of 0%
- Lowered interest rate for 18 months
- Cashback rewards on the new card
- No annual fee
- Credit score of 670 to 850
- Regular interest rate of 13.49% to 24.49%
3. Citi Simplicity
With an extended 0% interest rate of up to 21 months, this is another card to keep in mind as you shop for a balance transfer card. Who wouldn’t want the extra moths of reduced payments? There is no introductory transfer fee for the balance offered, which is vital to take note of. However, you still got close to two years to clear the transferred balance which is a huge advantage. This takes the pressure off as you sort out your finances and work to clear the debt.
Once you get this card, you get up to 4 months to make the transfer that gets you the 0% rate. Take the opportunity to come up with a plan of how to clear the balance. You need a credit score above 670 to qualify for the 0% interest rate. If you don’t qualify, then the regular rate charged is 14.74% to 24.74%. A transfer fee of 5% is charged on the balance but no annual fee applies.
- 21 months to clear transferred balance
- 4 months to transfer the balance
- 0% interest on the balance if you qualify
- High credit score to qualify for 0% transfer balance
- High regular interest rate
- 5% transfer fee charged on the balance
4. Chase Freedom Unlimited
The rewards start rolling in as soon as you apply for the card successfully. You get a bonus amount of $150 once you spend a total of $500 on any purchases. However, this needs to be done within the first 3 months of having the card. It doesn’t apply once the time elapses. The card gets you another reward of cash back on all purchases made set at 1.5%.
The duration of the intro 0% is shorter compared to other cards at 15 months only. If you opt for this card, then you should have a payment plan in place before you sign. the credit score required to qualify for the 0% rate is 670 or more. If you don’t have this score, then you get the regular interest rate set at 16.49 to 25.24%. A balance transfer fee is charged at 5% of the total amount but there is no annual fee.
- Bonus of $150 on purchases of above $500 made within the first 3 months
- Cash back of 1.5% on purchases
- 0% interest rate on balance transferred
- High credit score required for 0% interest rate
- High regular interest rate
5. Citi Diamond Preferred Card
This is another great card that gives you more time to get your finances in order and create a payment plan. Apply for Citi Diamond Preferred Card and benefit from 0% interest rate on transferred balance for 21 whole months! Now that is a great deal for you. Don’t strain your finances. Remember this only works if you qualify with the required credit score. Without it, you get a regular rate for the card charged at 13.74% to 23.74%.
The card accords you 4 months to complete the balance transfer which means you can design a payment plan and get to work. You require an excellent credit score of 670 to 850 to qualify for the 0% rate on the balance transferred. You can access your FICO score for free with this card at any time online. The company charges you a transfer fee at 5% of the balance transferred but no annual fee applies.
- Balance transferred is charged 0% interest for those who qualify
- Duration of 21 months to pay the balance
- 5% of the balance charged as transfer fees
- Top credit score required for 0% interest on the balance
6. Amex Everyday Credit Card
To start off, you enjoy a great reward any time you shop for groceries using the card. You get 2 points from Amex for every $1 spent in this manner. However, it’s important to note that the reward is limited to a total annual amount of $6000. You can check more details on how to redeem points on the American Express Membership Reward Program. Another reward you get when you sign up for this card is a 20% bonus when you pay 20 bills.
The introductory percentage for this card once you transfer a balance from another is 0%. You have 15 months to pay it off. This only applies if you have a good FICO score of 670 and above. If you don’t then the regular rate is set at 12.99% to 23.99%. You won’t be charged any annual or balance transfer fees. You can take up to 60 days to transfer the amount.
- No annual or balance transfer fees apply
- Great rewards of 2 points per every $1 spent on groceries
- 20% bonus on bills paid
- High FICO score required for 0% offer is high.
The fine print plays a key role in every choice after the decision to make a balance transfer. Do your calculation and see if it’s wise to transfer the balance in the first place. You might be surprised to find you’re better off with your old card! Still, if you want to make the switch to a new one, take the time to shop around for one. No quick decisions based on what the credit card people tell you.