When it comes to choosing a credit card, 0% balance transfer cards tend to be a popular choice.
Many consumers carry a balance on their credit card, and choosing a 0% balance transfer card helps you pay off your old debt while allowing you to save money on interest. Most balance credit cards will offer an introductory period of a low or even 0% interest rate for a set period of time, which debt owners can take advantage of to lower their current interest fees & expenses. Here is a list of our top recommendations for balance transfer credit cards:
WalletGeek's Best Balance Transfer Card Picks
Saving Interest With a Balance Transfer :
Average households in the US tend to carry more than $6,000 of debt month by month. If they have a typically high APR (let’s say 17%), they’d pay more than $900 in interest each year on that debt. Transferring the debt to a 0% interest card would mean they would pay zero interest over a predetermined amount of time.
Be Cautious of the Transfer Fee :
Yes, balance transfer credit cards usually all come with a transfer fee. Depending on the balance transfer card you choose, this can vary anywhere from 2% up to 5% of the balance you are transferring. Always consider the transfer fee percentage and whether or not it’s actually going to save you money in the long run.
How to Apply :
Apply for your chosen balance transfer card
Search for cards that offer an introductory 0% interest rate for a certain amount of time. Many cards offer a 6-month 0% interest offer for new customers, however, even 60 days could give you an advantage. In order to qualify for a balance transfer card, you’ll need a good credit score. Many card issuers will also require minimum annual income or household income. As issuers don’t allow transfers from the same bank that holds your debt, you’ll have to make sure you’re applying with a different credit card company. For example, if you have two American Express cards, you won’t be able to transfer balance from one to another because you’re still using the same bank.
You’ll have to have a fairly good credit score if you’re looking to apply. In fact, many credit cards require an excellent credit score to qualify for a low or zero-percent balance transfer card.
Inform the issuer of your transfer request
As technology continues to develop, many card issuers decided to provide an online banking option for easy transfers between credit card issuers. Some even offer convenient paper checks to pay off your old credit card and transfer it to the new credit card company. However, traditional cards may still require a phone call from you in order to fulfill your transfer request.
Give all necessary information
Typically, the issuer will ask you for your account number and the amount you want to transfer. As a new customer, your balance transfer card may come with a limit. If your requested amount is higher than the limit, you may be offered a chance to transfer only part of your requested debt.
Don’t forget to continue paying off your debt
As you make the balance transfer, you shouldn’t forget about your old card. Ensure you are paying at least the minimum balance required in order to avoid damaging your credit score. This is to make sure you don’t miss a payment in case there is a delay with your balance transfer request – it can often take a couple of days before the debt is moved.
Pay your debt on the new card
As your debt shows up on your new card, you can now start saving money as you pay it off. Make sure you pay attention to the 0% interest offer.
Don’t close your old credit account
Closing credit accounts can lower your credit score. When you close your account, you also close your available credit limit, which then affects the debt to credit ratio. You can keep your account open without using it, however, pay attention to the additional charges such as the annual fee. If your card doesn’t have an annual fee, it’ll offer an extra peace of mind as you’ll simply no longer have to worry about that credit card.
Balance Transfer Cards – Pros & Cons :
Paying off your debt faster and saving money on interest charged appeals to everyone. Being in control of your finances by reducing interest charges will also help to reduce the stress of managing your monthly finances while you’re in the low or zero-percent interest window.
Transferring your balance doesn’t eliminate your obligation to pay. It’s a temporary financial commitment that could result in even higher credit card interest rates if you don’t pay off your debt on time. Furthermore, balance transfer fees can eat up your expected interest savings – so it’s important to calculate your savings after accounting for the transfer fees, and whether or not you will actually save money by doing a balance transfer.