Balance transfer cards offer a 0% interest rate over an extended period, making debt repayment much simpler and faster than before. Just make sure that you put together a repayment plan before the 0% period expires!
Credit card issuers generally charge a balance transfer fee; however, some may waive it on transfers completed within a specified timeframe.
No-balance-transfer-fee cards
Credit card balance transfer fees are associated with moving debt between cards. They’re typically either a flat-rate fee or percentage of what has been transferred. Although one might not appear too costly at first glance, balance transfer fees can become substantial over time when moving large balances of debt between cards.
Consider your needs when selecting a balance transfer card: interest rate and available benefits should both be carefully considered. Some cards offer zero percent introductory periods on purchases to allow you to avoid interest charges for an extended period.
Be mindful that these 0% introductory periods will eventually expire and your card’s regular APR will become applicable; to avoid incurring interest costs it’s essential that debts be cleared off prior to this timeframe ending. First identify all of the debt you wish to transfer – amount, APR and creditor; calculate balance transfer fee which usually appears as part of other card fees on credit card statements (3% to 5% of balance amount);
No-interest-transfer-fee cards
Balance transfer cards without fees can save you thousands in interest payments if you pay off your debt before its 0%-interest period ends; however, qualifying is typically harder and generally requires excellent credit to qualify.
Balance transfer fees typically fall within the range of 3-5% of total debt you transfer. As this fee will reduce the total amount you can transfer, it is crucial that you understand its true cost before applying for a card.
Numerous balance transfer cards provide a limited-time 0%-interest period on balance transfers, so it is wise to shop around. You might discover one offering an extended introductory period or rewards. Just be sure to pay off your balance before it ends or else the card’s regular APR will apply.
Low-interest-transfer-fee cards
When considering balance transfer credit cards, it’s essential to factor in their introductory period and the rewards available – many cards offer limited 0% APR offers – before making your decision. Keep in mind that balance transfer cards usually do not provide optimal rewards for new purchases but should only be used to pay down debt. In order to qualify for one of these cards you’ll require good to excellent credit with a low debt-to-income ratio ratios.
Most credit cards charge a one-time balance transfer fee that ranges from 3% to 5% of the amount you’re transferring; however, some cards offer no balance transfer fees or waive them temporarily. It is best to consider this cost against what would be saved on interest costs as more debt you have, the better an attractive interest rate becomes for you.
0%-interest-transfer-fee cards
Most balance transfer cards charge a fee, usually between 2% and 5% of the transferred amount, that will appear on your monthly statement along with other fees. These charges can quickly add up if you carry an outstanding balance.
But, if you can devise a plan to pay off the debt within its 0%-interest period, paying the transfer fee might be worth your while in order to avoid incurring interest charges. Keep in mind that this introductory period typically lasts no more than 12 months and credit card issuers may cancel it if payments aren’t made timely.
Another drawback of these cards is their inability to transfer debt between different credit card issuers. Therefore, you might benefit more from choosing one offering an extended 0%-interest-transfer-fee period, although this varies from less than a year up to 21 months depending on its fine print.
