How do you avoid balance transfer fees?

Yes, you should do a balance transfer if it will save you money. To determine whether a balance transfer is a good idea, use a balance transfer calculator. That way, you can compare the cost of sticking with your current card to the savings available from the latest balance transfer offers. You will also need good credit or better to qualify for the ... read full answerbest balance transfer cards. If you don’t know where you stand, you can check your credit score for free, right here on WalletHub.

Doing a balance transfer means using a new credit card to pay down existing debt from another credit card or loan. A transfer should save you money on interest and enable you to pay off your debt faster. But if you’re not careful, you could wind up with even more debt and a higher interest rate than you started with.

When You Should do a Balance Transfer

• Your credit is good or excellent: A credit score of 700+ is typically required to get a balance transfer credit card with a 0% APR.
• You have moderate debt: The best balance transfer cards have minimum credit limits of $500 - $1,000. But the issuers will offer higher credit limits to people with higher credit scores. If you have a lot of debt, you may only be able to transfer part of what you owe.
• You take fees into account: Balance transfers cost you a percentage of the total debt transferred, usually 3% to 5%. That fee gets added to your balance on the new card. So, the balance plus the fee must be less than or equal to your credit limit on the new card. There are a few cards that do not charge a transfer fee.
• You have a payoff plan: Figure out what monthly payments you’ll need to make in order to pay off the balance by a target date. Aim to pay in full before any low intro APR period ends, given that regular rates are often above 20%.
• You have a separate credit card for new purchases: When you charge a new purchase to a balance transfer card, it’s subject to the card’s purchase APR. And there’s not always a low intro APR for purchases, even when a card offers 0% balance transfers.

If you decide that you should do a balance transfer, make sure to shop around for the best offer. Take a look at the best balance transfer credit cards and compare their terms to see which one fits your needs.

Once you do a balance transfer, you may be tempted to apply for another balance transfer card when the introductory APR on your current card expires. That may sound like a good plan to avoid paying interest, but it’s easy to rack up more debt than you can afford. Plus, 0% APR balance transfers aren’t always available.

There’s no hard-and-fast rule about how many balance transfers you can do. But individual issuers may have their own policies. For instance, you can request up to three balance transfers when applying for the BankAmericard® credit card. Your credit line will also limit the number of balance transfers you’re able to do. The total dollar amount that you can transfer to a credit card can’t exceed the credit limit you’re approved for. You won’t be able to transfer a $10,000 balance to a credit card with a $5,000 limit, for example.... read full answer

It’s also worth noting that even the best balance transfer credit cards offer money-saving terms only for a limited time. Zero percent transfer deals, and other low introductory APRs, expire after a certain number of months following account opening. And fairly high regular APRs tend to take their place. Some cards have promotional balance transfer fees, too, requiring you to transfer your balance within the first 60 days to maximize your savings. So you don’t want to space out your balance transfers too much because the longer you wait, the less you’re likely to save.

Finally, you can’t count on another 0% balance transfer credit card being available to bail you out at the end of your current card’s interest-free intro period. That means you should only transfer an amount that you can afford to pay off before regular rates kick in.

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.