How do I compare balance transfer credit cards?

Question

Balance transfers do not affect your credit score directly but can still be helpful. While balance transfers aren’t reflected on credit reports and thus aren’t directly used to calculate credit scores, a balance transfer can positively impact your credit if you use the transfer to save money and get out of debt sooner.... read full answer

Here’s how balance transfers affect your credit score:

High credit utilization rate:
It’s best to use less than 30% of a credit card’s credit limit. However, a balance transfer can wind up consuming much more than that, which isn’t great for your credit score.

Hard inquiry:
When you apply for a balance transfer card, the issuer will pull a copy of your credit report. Known as a hard inquiry, this will lower your credit score slightly, but only temporarily.

Average age of accounts:
A new balance transfer card will reduce the average age of your credit card accounts, which could knock a few points off your credit score.

Future credit score increase:
Your credit score should recover with time. Making payments on time is crucial to maximizing your credit score after a balance transfer, however, as is avoiding serious debt in the future.

To stay on top of your credit throughout every stage of a balance transfer, sign up for a free WalletHub account. You’ll get daily credit score updates, 24/7 credit monitoring, and personalized credit improvement advice.

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Answer 1 · 2019-11-15 02:29:33

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Christie Matherne, Credit Card Writer

@christie_matherne • 11/15/19 This answer was first published on 10/14/19 and it was last updated on 11/15/19.For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.

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Focus on 3 things when you compare balance transfer credit cards: balance transfer fees, balance transfer intro APRs, and regular APRs. The best balance transfer credit cards have a low balance transfer fee (sometimes $0), a 0% intro APR on balance transfers for longer than a year, and a regular APR below 20%. Even the best balance transfer cards are known for having pretty high regular rates, which is why it’s best to pay off your transferred balance before they take effect. Plus, the regular APRs on credit cards are usually advertised as a range, so the rate you get depends on your overall creditworthiness, and you won’t know what it is until you’re approved for an account.

It is difficult to compare balance transfer cards based on how big of a balance you wish to transfer, unfortunately. You won’t know how big your credit limit will be on the new card until you’re approved for one. Some cards state a minimum credit limit in their terms. But not all do that, and none of them disclose a maximum credit limit. If you don’t get approved for a high enough limit to accommodate your requested balance transfer amount, you can do a partial balance transfer. This will still leave a portion of your balance un-transferred and accruing the old interest rate, but you’ll hopefully improve your situation overall.

With all of that in mind, the best way to go about comparing balance transfer credit card offers is online with the aid of a balance transfer calculator. This will make it easy to compare intro APRs, balance transfer fees, regular APR ranges, and the credit standing required for approval side by side. And WalletHub’s free balance transfer calculator will help you plan out your monthly payments and price out which card will save you the most money.

Questions to Ask Yourself When Comparing Balance Transfer Cards:

What is the current regular APR on the debt? Knowing your current regular APR gives you a threshold for comparing the APRs on balance transfer cards. Whatever it is now, go lower—and find the lowest one you qualify for.
How much will the balance transfer fee cost? A handful of cards don’t have balance transfer fees, but most do. The average balance transfer fee is about 3%, but some cards charge up to 5%. Taking this fee into account is essential to finding the best balance transfer card for you.
How long will it take to pay off the transferred debt? Using a balance transfer calculator can help you figure out how long paying off your balance will take with different fees and intro APR periods. That will tell you how big of an impact a high regular APR is likely to have. And knowing exactly how much you’ll pay in interest makes comparing balance transfer cards way easier.
Which cards are realistic options? The best balance transfer credit cards generally require good credit or better for approval. Checking your credit score for free on WalletHub allows you to screen credit cards based on your approval odds before you apply for them.

Comparing balance transfer cards can be a confusing process, but taking the time to crunch some numbers before you apply for a card will literally pay off in the end. Make every effort to pay off your transferred balance before any intro APR period expires, and don’t use the card for anything else until you do.

How do I compare balance transfer credit cards?

Christie Matherne, Credit Card Writer

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