Although interest rates are rising, credit card companies continue to provide highly competitive 0% balance transfer offers. When used properly, a balance transfer can help borrowers save hundreds (even thousands) of dollars and get out of debt faster. Just keep these five rules in mind:
- You can only transfer debt between two different credit card companies. For example, if your credit card debt is already at Citibank, you would not be able to transfer that debt to another Citibank credit card.
- Avoid deferred interest offers. All the offers listed in this article waive the interest during the promotional period. Store credit cards frequently offer deferred interest, which means you could be hit with a retroactive interest penalty if you don’t pay off your entire balance during the 0% promotional period.
- Avoid, but don’t be afraid, of a balance transfer fee. Although the best balance transfer cards have no balance transfer fee, you can still save a lot of money even when you have to pay a balance transfer fee. To simplify the math, just think about your monthly interest rate. If the interest rate on your credit card is 12%, you are paying roughly 1% a month. If you get a 21 month balance transfer for a 3% fee, you would start saving money after just 3 months. That math isn’t exact – but it is close. And it shows that paying the fee can be worthwhile on the longer balance transfer deals.
- Make sure you complete the balance transfer as soon as possible. The 0% promotional period starts from when you open the card, not from when you transfer the balance. So you should transfer right away to start saving. And with most cards, you will lose the offer if you don’t transfer the balance within 60 or 90 days.
- Be disciplined during the promotional period. Once you complete the balance transfer, your minimum monthly payment will likely decrease. It might be tempting to enjoy the lower monthly payment. However, if your goal is to become debt-free, you should pay as much as you can towards the balance. Every dollar goes towards principal, so it is a great time to make payments.
To find the best balance transfer credit cards, you can search online. For this list, I have searched at NerdWallet, CreditKarma and CompareCards (a part of LendingTree, which also owns MagnifyMoney, where I work). Not all cards were found on all sites.
Best Overall Offer: $0 Balance Transfer Fee and 0% Intro APR for 15 months
If you want to avoid paying a balance transfer fee, the longest 0% offer on the market is 15 months. For a long time, Chase Slate was the only product with this offer. However, just this month American Express eliminated the intro balance transfer fee on the Amex Everyday Card. This makes the Amex offer unique. Historically, cards with the best balance transfer offers did not have rewards. And cards with great rewards did not have very good balance transfer offers. Amex has combined the two, and you can enjoy a no-fee offer while earning Membership Rewards points.
Longest Offer: 0% APR for 21 months with a 3% balance transfer fee
If you think it is going to take longer to pay off your credit card, you can get a 21-month 0% intro APR on balance transfers at Citi with the Diamond Preferred Credit Card. Citi used to offer 21 months on Simplicity, but has recently reduced that to 18 months. Fortunately, you can still get the extra long balance transfer on this card. Just remember: with Diamond Preferred, the 0% interest rate on purchases only lasts 12 months.
Good Offer From A Credit Union: $0 Balance Transfer Fee and 0% Intro APR for 12 months
Many people want to remain loyal to credit unions, but struggle to find lucrative intro offers. Fortunately, Alliant Credit Union can make credit union loyalists happy. Anyone can join the credit union. And their Visa Platinum has no balance transfer fee and no interest for 12 months. Once a member of Alliant, you can enjoy their full product suite, which includes great rates on both savings accounts and loans.
These Offers Might Not Last
As interest rates increase, balance transfer offers become more expensive for banks. Although credit card companies are lending money to you at 0%, they have to pay an interest expense to borrow the funds. And as rates rise, the cost of borrowing that money increases for banks. It is highly unlikely that 0% offers will ever disappear. But when rates rise, the promotional period typically gets shorter. Just remember: in order to be approved for one of these offers, you will need to have good or excellent credit. These deals are designed for responsible people who just have a bit too much debt.
