Balance transfer credit cards are a tool that people use to regain freedom from the credit card debt they are under. The primary purpose of these cards is to offer the cardholders an opportunity to move their debt from high-interest credit cards to a new credit account. Doing this would mean that people want to pay little or zero interest on their debt as a new credit account will charge 0% introductory APR. Thus, people can pay their debt without incurring a high interest, saving them valuable funds.
For most balance transfer cards, the intro APR periods are 12 months to 21 months. This would mean that people should pay off all or most of their debt within this period since there is no interest payment. Once the intro APR period is over, people can no longer enjoy an interest-free period as they would be prone to paying interest on their debt.
Moreover, those people who are still left with some debt payments and would not like to pay any interest can choose to move their balance to a new credit account. Although this option is available, it would certainly move to damage the person’s credit score. The reason is because of having too many credit accounts.
Some people are of the mindset that they wish not to fall further behind on their debt payments and hence, would choose to consolidate their debt with balance transfer credit cards. Balance transfer cards can also be used for other purposes, like people can earn great rewards from making their everyday purchases. Some balance transfer cards offer cellphone and travel insurance, but only particular credit card issuers offer such perks.
This guide will cover the basics of balance transfer credit cards, including carrying out a balance transfer. The article will highlight the advantages and drawbacks of selecting such cards to pay off credit card debt. We will list down the best balance transfer credit cards people use in the industry.
Let us look into the fundamentals of balance transfer credit cards.
What is a Balance Transfer Credit Card?
As the name suggests, balance transfer cards transfer the balance from one credit account to another. Not all credit cards have this feature, so cardholders would need to check in with their card issuers to know about it. Once a person has completed the balance transfer to a new credit account, the previous account will be paid off from all credit debt. The individual can now make payments on the new credit account, like paying back the debt they owe.
Since the primary purpose of balance transfer cards is to pay off the existing debt, the best balance transfer cards come with a 0% introductory annual percentage rate. Within the introductory period set by the card issuer, the cardholder will not pay any interest payment. They would only need to pay the amount they owe, which is the debt. However, if the person cannot pay back the entire debt, the card issuer will charge the cardholder with a variable APR on the remaining amount. Hence, paying off the interest efficiently is essential to avoid interest payments.
People are prone to different kinds of debt. A person can transfer that debt to another credit card with a balance transfer credit card. However, the type of debt transferred to the other credit account depends on the balance transfer card the person is using. The reason is that some balance transfer cards only allow cardholders to transfer credit balances to the card, while others do not have such limitations. Other card issuers will let the person transfer all kinds of debts. Only selective balance transfer cards offer such features.
When using a balance transfer card, some crucial factors should be considered. Firstly, the total transfer amount plus the transfer fee should be less than the limit imposed by the card provider. Generally, card providers have a daily limit that needs to be catered for when transferring the balance. Moreover, the overall limit of the card should also be taken into consideration. If these factors are not followed, the balance transfer will be rejected. Moreover, a person cannot do a balance transfer between two cards that come from the same card provider.
When is the Right Time to Get a Balance Transfer Credit Card?
The right time to carry out a balance transfer is when an individual has a high credit balance and does not wish to pay a higher interest. Sometimes, people plan to make a large purchase through their credit card, which they wish to pay back over time. Under these circumstances, it is beneficial to get a balance transfer credit card.
With balance transfer cards, a person can move their debt to another card with lower interest and a 0% intro APR period. The new credit account relative to the original account will yield positive results as the person would only need to pay the principal amount. Cardholders should understand that this feature will be a time constraint and last only for a specific period.
Individuals should contact their card provider to understand the type of credit balance they can transfer to the other credit account. Some credit card issuers only offer the feature of transferring credit balances, while some other card companies do not impose any restrictions. Through such card companies’ people can avail different balance transfer options like auto loans, personal loans, and student loans.
Let us look at the procedure to do a balance transfer.
How Can a Person Carry Out a Balance Transfer?
Now that you have understood the basic information about balance transfer let us list down the factors a person should consider to carry out the balance transfer to another credit account. People have different perceptions regarding balance transfer as some of them believe that a lot of work goes into moving the balance from one credit account to another. However, the process is straightforward to understand from the cardholder’s end.
The following step-by-step guide will help the people understand the balance transfer process:
Check the Rules
Different balance transfer cards have specific rules that the cardholders need to follow, such as completing a transaction within a particular time. Most card providers include this information as part of their marketing strategy so that people know when to transfer the credit. Some cardholders take the help of Schumer Box, through which they can easily compare different credit card offers while understanding the terms and conditions of the cards.
People should be aware that they would incur a balance transfer which differs for each card and is between 3% to 5%. Moreover, card issuers also list down the period when the balance transfer debt should be paid back in full before the 0% intro APR period is over.
Collect Relevant Information
The next step for the cardholder would be to gather all relevant information like the account details of the transfer card. The account details would also include the card number, the card balance, and issuance and expiration date. The new card provider will need all this information to issue the new balance transfer credit card.
Contact Customer Service
Upon receiving the new balance transfer credit card, cardholders should contact customer service and inform them that they wish to carry out a balance transfer to the new credit card. While the majority of the card providers will ask cardholders to request a balance transfer online, some card issuers will provide a balance transfer check.
The most convenient way is by logging in to the account and initiating the process online. Once all the information is provided to the new credit card issuer, they will reach out to the old credit card company and get the balance transfer process going. Generally, the new issuer pays off the debt by paying the amount to the old card issuer and all the relevant fees and expenses incurred in the process are forwarded to the cardholder.
Keep Paying the Minimum
Financial experts advise that cardholders should at least pay the minimum amount that they can to cover their debts on the old credit card before the balance transfer is complete. Doing so will result in no late penalties or fees, which is positive for the credit limits. A balance transfer card’s duration to transfer the debt is five to six weeks. This period can be long, so it is better to pay the minimum payments to keep the activity on the card.
Monitor the Accounts
Cardholders should keep a close check on their account through which they would know all the updates on their balance transfer. The official time for balance transfer is within six weeks, so cardholders should monitor their accounts for all kinds of updates. The balance on the old card will show as paid, whereas, on the new card, people can view their balance as owed, which would mean that they need to pay the outstanding amount.
Close Old Card After Careful Consideration
It is essential to pay off the outstanding balance on the new card before closing the old one. If a cardholder closes the old card before the dues have been paid off, it will negatively affect the credit utilization rate. As a result, the credit score will be affected adversely.
Closing the card after the debt is paid will look much better as the credit scoring model will account for the number of credit cards in use. So the 20% weightage will have a positive impact. Also, having fewer credit cards means the person will make fewer purchases on credit.
Let us look at the benefits and drawbacks of owning a balance transfer credit card.
Pros and Cons of Balance Transfer Credit Cards
In the previous section, we covered the basics of balance transfer cards. We will discuss the perks and pitfalls of keeping a balance transfer card and using it. Let’s get started!
Pros of Balance Transfer Credit Cards
The following list accounts for the pros:
Save Money
Since the primary purpose of balance transfer cards is to avoid high-interest rates, moving the debt to a new card would bring lesser interest and a 0% intro APR period. Cardholders can pay back the principal payment within this period and would not need to pay any interest amount. The 0% intro APR period lasts for 12 to 21 months, giving cardholders ample time to pay all or most of their debt.
Improve Credit Utilization Ratio
Financial experts advise that cardholders should pay off their debt on time as it positively impacts the credit utilization rate. When a person uses less of their available credit, it is good for the credit score. The lower the credit utilization ratio, the better it is for the credit score. Moreover, improving the credit utilization ratio would mean the person would have a higher overall credit limit.
Reduce Monthly Payments
Through balance transfer cards, people will not have to pay interest for some time, decreasing the number of monthly payments. As a result, people will be able to save valuable funds to be used for other things.
Consolidate Debts
Those cardholders with several credit cards with a lot of debt can transfer it by consolidating the debt into just one balance transfer credit card. This is to ensure convenience in paying the dues and budgeting purposes. Moreover, the person’s minimum monthly payment will be less for one consolidated debt relative to the total debt payments from all the accounts and credit cards.
Fast-Track Repayment
The repayment schedule of balance transfer cards is quite efficient, and with less or no interest payments, cardholders would have the opportunity to pay their dues soonest. Under this procedure, the debts will be written off much faster.
Cons of Balance Transfer Credit Cards
The following list accounts for the cons:
High Credit Approval Threshold
The best balance transfer cards have the longest 0% intro APR period, and these cards are only available to individuals with a high credit rating. So people with an excellent credit score on the FICO scoring model will only benefit from balance transfer cards. This would also mean that those with average or below-average credit scores will not get their hands on high tiered balance transfer cards with the best terms and conditions.
Interest Paid on Remaining Balance
Although many people try to pay all of their debt during the introductory period, some are still left with a debt that needs to be paid off. Unfortunately, these people could not pay it back before the 0% intro APR period. Hence, the remaining balance on the credit card is subjected to the new card issuer’s variable APR. The principal balance will be prone to interest payment which the cardholder will have to pay.
Less Attractive Rewards
The balance transfer credit cards are famous for their lengthy 0% intro APR period, but some card issuers allow the use of these cards to offer modest rewards. Although these rewards are not attractive, they offer fair cash back rewards to the cardholders. These cashback rewards are related to a person’s purchases through the card.
Limits on Transfer Amounts
Balance transfer cards have specific limits, which are different for each card provider. These limits are not disclosed on the company’s websites or advertised. Hence, a person cannot know them unless they apply for the card. Having such transfer limits means that the person cannot transfer more than a particular amount.
Late Payments Will Cause Problems
One perk of balance transfer cards is that the 0% intro APR provides zero or low-interest rates. But the favourable interest rate may be in jeopardy if the person makes late payments on their dues. Making late payments would also impact the credit score adversely.
Let us look at the best credit cards for balance transfer.
Best Balance Transfer Credit Cards
Balance transfer credit cards are ideal for saving up money while paying back the dues or debt the person owes to the cardholder. Since these cards come with a low 0% intro APR, cardholders only need to pay the principal that they owe to the creditor. This section will look at the best balance transfer cards that offer the longest intro periods and the fewest fees.
Wells Fargo Reflect Card
The Wells Fargo Reflect card is considered best for long 0% intro APR. Cardholders can choose to extend the intro APR period with the condition that they would carry out payments on time. The card has a huge customer base mainly due to its long APR period, allowing people to pay dues little by little. Moreover, since people can also extend the APR period, they need not pay any interest payments on their principal amount.
The following are the features offered by the Wells Fargo Reflect card:
- Credit Score: Between the fico scoring range of minimum 670 to a maximum 850
- Intro Purchase APR: 0% intro purchase APR till 21 months when the account was opened
- Intro Balance Transfer APR: 0% intro purchase APR till 21 months when the account was opened for a balance transfer
- Variable APR: Between the range of 13.74% to 25.74% after the intro period
- Rewards: None
- Annual Fee: None
- Welcome Bonus: None
Pros include the following:
- The card provides the industry’s longest 0% intro APR relative to its competitors.
- The card also offers cell phone protection and covers the cost of up to $600 if it is lost or stolen.
- Due to no annual fee, the cardholders have to incur less expense.
Cons include the following:
- The card issuer charges a balance transfer fee of 5% or $5, whichever is the higher amount from the cardholders.
Citi Diamond Preferred Card
The Citi Diamond Preferred card is another balance transfer card considered ideal for long 0% intro APR periods. The card fits perfectly for those cardholders that wish to pay off their dues efficiently and effectively. The card comes with various balance transfer strategies that help the cardholder avoid interest rates.
The following are the features offered by the Citi Diamond Preferred card:
- Credit Score: Between the fico scoring range of minimum 670 to a maximum 850
- Intro Purchase APR: 0% intro purchase APR till 12 months when the account was opened
- Intro Balance Transfer APR: 0% intro purchase APR till 12 months when the account was opened for a balance transfer
- Variable APR: Between the range of 14.49% to 24.49% after the intro period
- Rewards: None
- Annual Fee: None
- Welcome Bonus: None
Pros include the following:
- The card provides one of the best and longest APR periods in the credit card industry.
- Due to no annual fee, the cardholders have to incur less expense.
- The company monitors the credit scores of the cardholder and updates them monthly to the major credit bureaus when the dues are paid back, which helps build the person’s credit rating.
Cons include the following:
- The card is not known to offer rewards like cash back as part of its features.
- The card issuer charges a balance transfer fee of 5% or $5, whichever is the higher amount from the cardholders.
- The card also charges a foreign transaction fee from the cardholders.
Discover It Balance Transfer
The Discover It Balance Transfer is considered the best balance transfer and cashback credit cards. With this card, cardholders can enjoy the ideal balance transfer and earn rewards through the card’s cashback scheme on purchases. Cardholders will get an excellent intro APR period while making money on their purchases through the cashback program.
The following are the features offered by the Discover It Balance Transfer card:
- Credit Score: Between the fico scoring range of minimum 670 to a maximum 850
- Intro Purchase APR: 0% intro purchase APR till 6 months when the account was opened
- Intro Balance Transfer APR: 0% intro purchase APR till 18 months when the account was opened for a balance transfer
- Variable APR: Between the range of 12.24% to 23.24% after the intro period
- Rewards: The cashback rewards can range from a minimum of 1% to a maximum of 5%. The 5% cashback will be on everyday purchases, while the 1% cashback will be on all other purchases.
- Annual Fee: None
- Welcome Bonus: The welcome offer will be based on Cashback Match.
Pros include the following:
- The card provides a significant APR period relative to others in the credit card industry.
- The card comes with a sign-up bonus that is based on Cashback Match.
- The card also provides the cardholders with a robust cashback program to earn them some money from carrying out purchases.
- Due to no annual fee, the cardholders have to incur less expense.
- The company monitors the credit scores of the cardholder and updates them monthly to the major credit bureaus when the dues are paid back, which helps build the person’s credit rating.
Cons include the following:
- The card does not have any fixed bonus categories.
Citi Double Cash Card
The Citi Double Cash card is another great one for balance transfer and rewards credit cards. Many of its users know the card as a winner because they can get balance transfers and cashback best. The balance transfer branch offers them a long 0% intro APR period, while the cashback branch gives them a wide range of cashback rewards from other purchases.
The following are the features offered by the Citi Double Cash card:
- Credit Score: Between the fico scoring range of minimum 670 to a maximum 850
- Intro Purchase APR: N/A
- Intro Balance Transfer APR: 0% intro purchase APR till 18 months when the account was opened for a balance transfer
- Variable APR: Between the range of 14.74% to 24.74% after the intro period
- Rewards: The cashback rewards are up to 2%. The 1% cashback is on purchases, while the other 1% cashback is when the minimum has been paid back every month.
- Annual Fee: None
- Welcome Bonus: None
Pros include the following:
- The card is known as the industry-leading cashback card due to its unique feature in the cashback scheme.
- The card provides one of the best 0% intro APR periods in the credit card industry
- Due to no annual fee, the cardholders have to incur less expense.
- The company monitors the credit scores of the cardholder and updates them monthly to the major credit bureaus when the dues are paid back, which helps build the person’s credit rating.
Cons include the following:
- The card also charges a foreign transaction fee from the cardholders.
- The card does not offer a sign-up bonus to the new cardholders
- The card does not offer 0% intro APR on purchases.
Citi Simplicity Card
The Citi Simplicity card is ideal for long 0% intro APR periods. The card is known to be unmatched by its users because of its favourable features.
The following are the features offered by the Citi Simplicity card:
- Credit Score: Between the fico scoring range of minimum 670 to a maximum 850
- Intro Purchase APR: 0% intro purchase APR till 12 months when the account was opened
- Intro Balance Transfer APR: 0% intro purchase APR till 21 months when the account was opened for a balance transfer
- Variable APR: Between the range of 15.49% to 25.49% after the intro period
- Rewards: N/A
- Annual Fee: None
- Welcome Bonus: None
Pros include the following:
- The card is famous for having a great 0% intro APR period
- Due to no annual fee, late fee, or penalty APR, cardholders have to incur less expense.
- The card is secure with the Citi Quick Lock feature; thus, $0 liability is incurred on unauthorized charges
Cons include the following:
- The card does not offer a sign-up bonus or rewards to the new cardholders
- The card also charges a foreign transaction fee from the cardholders.
- The card issuer charges a balance transfer fee of 5% or $5, whichever is the higher amount from the cardholders.
US Bank Visa Platinum Card
The US Bank Visa Platinum Card is considered best for balance transfers and purchases. The card is known to provide the lowest interest rates to the cardholders on their balance. This would mean that the interest payment on the card would be fairly low, and people will mostly be paying the principal amount that they owe to the card issuer.
The following are the features offered by the US Bank Visa Platinum card:
- Credit Score: Between the fico scoring range of minimum 670 to a maximum 850
- Intro Purchase APR: 0% intro purchase APR till 20 months when the account was opened
- Intro Balance Transfer APR: 0% intro purchase APR till 20 months when the account was opened for a balance transfer
- Variable APR: Between the range of 15.24% to 25.24% after the intro period
- Rewards: N/A
- Annual Fee: None
- Welcome Bonus: None
Pros include the following:
- The card is famous for having the longest 0% intro APR period
- Due to no annual fee, the cardholders have to incur less expense.
- The card also offers cell phone protection and covers the cost of up to $600 if it is lost or stolen.
- The company monitors the credit scores of the cardholder and updates them monthly to the major credit bureaus when the dues are paid back, which helps build the person’s credit rating.
- The person can choose the payment date that fits perfectly with their schedule to pay the dues.
Cons include the following:
- The card does not offer a sign-up bonus or rewards to the new cardholders
- The card also charges a foreign transaction fee from the cardholders.
BankAmericard Credit Card
The BankAmericard credit card is known for balance transfers and purchases. The card offers a variety of features that have attracted many people to buy this balance transfer card.
The following are the features offered by the BankAmericard credit card:
- Credit Score: Between the fico scoring range of minimum 670 to a maximum 850
- Intro Purchase APR: 0% intro purchase APR till 18 months when the account was opened
- Intro Balance Transfer APR: 0% intro purchase APR till 18 months when the account was opened for a balance transfer
- Variable APR: Between the range of 13.24% to 23.24% after the intro period
- Rewards: N/A
- Annual Fee: None
- Welcome Bonus: $100 statement credit
Pros include the following:
- The card comes with a sign-up bonus that is a $100 statement credit
- The card is famous for having the longest 0% intro APR period
- Due to no annual fee, the cardholders have to incur less expense.
- The company monitors the credit scores of the cardholder and updates them monthly to the major credit bureaus when the dues are paid back, which helps build the person’s credit rating.
- The card does not charge the cardholders with a penalty APR, further reducing the expenses.
- The card offers extra security measures with their ‘contactless cards’.
Cons include the following:
- The card does not offer rewards like a cashback scheme to the new cardholders
- The card issuer charges a balance transfer fee of 5% or $5, whichever is the higher amount from the cardholders.
- To get the $100 statement credit, the cardholder will need to spend $1000 on purchases in the first 90 days of opening the account.
Chase Freedom Unlimited
The Chase Freedom Unlimited card is known for its 0% intro APR and rewards scheme. People can use this balancing card and enjoy both sides of branches: intro APR and rewards. The card offers various features that have made it so attractive to cardholders in the industry.
The following are the features offered by the Chase Freedom Unlimited card:
- Credit Score: Between the fico scoring range of minimum 670 to a maximum 850
- Intro Purchase APR: 0% intro purchase APR till 15 months when the account was opened
- Intro Balance Transfer APR: 0% intro purchase APR till 15 months when the account was opened for a balance transfer
- Variable APR: Between the range of 15.24% to 23.99% after the intro period
- Rewards: 5% cashback on travel, 3% cashback on medicines, restaurants, and 1.5% on all other purchases
- Annual Fee: None
Pros include the following:
- Due to no annual fee, the cardholders have to incur less expense.
- The cardholders can transfer rewards to other Chase credit cards and redeem them.
- The cashback rewards are quite generous, and people can make good money from the purchases.
Cons include the following:
- A 3% foreign transaction fee will be charged to the cardholders.
Conclusion
The article will guide you through balance transfer and what factors should be taken into account to prevent mishaps. Each step is explained effectively to guide the users in carrying out balance transfers. People need to understand that when their debt gets too big, it is time to pay it off, and that is why we included a separate section to discuss the right time to avail of a balance card. Moreover, the article has discussed the positives and drawbacks of owning a balance transfer card, which will help you decide whether to avail one.
The article covers the best balance transfer credit cards in the industry. We have covered everything about balance transfer cards, from the basics to providing relevant knowledge to beginners. Adequate knowledge will help choose the best balance transfer card. Financial experts advise prospective balance transfer cardholders to look at each card’s terms and conditions. It is crucial to carry out the due diligence and see the intro APR periods, interest rates, and the variable rate before agreeing to go with a particular card.
