The simplest way to avoid balance transfer fees is to apply for a credit card that does not charge any fees on balance transfers. Getting a credit card with no balance transfer fee that also offers a low balance transfer APR is actually the best overall way to reduce the cost of existing debt and pay off what you owe sooner.
One potential problem, though, is that low interest credit cards with no balance transfer fees are usually reserved for people with good or excellent credit, if such offers are even available at all. You can check your credit score for free on WalletHub to get a sense of whether you’re likely to qualify for one of the market’s best balance transfer credit cards, as well as check out other strategies for minimizing transfer fees below.
Best Options for Avoiding Balance Transfer Fees
Find a low APR credit card with no balance transfer fee. The best credit card with no balance transfer fee is the SunTrust Prime Rewards Credit Card because it offers a $0 balance transfer fee along with a balance transfer APR of 3.25% (V) for 36 months.
Compare personal loans with no origination fee. No-fee personal loans for debt consolidation are available to people with fair credit or better, though people with bad credit scores might also be able to get one if they have a cosigner.
Make a budget and a debt-payoff plan. The best way to avoid transfer fees is to avoid having to do a balance transfer in the first place. With that in mind, make a budget that maximizes monthly debt payments in order to pay off what you owe now as quickly as possible, then focus on keeping your spending in check to avoid racking up a big balance again in the future.
Finally, don’t rule out cards with balance transfer fees completely. If the card has a long-lasting introductory 0% balance transfer APR, it might be the option that saves you the most money overall, even considering the transfer fee. You can use WalletHub’s balance transfer calculator to help determine which option is best for you.
You should do a balance transfer if it will save you money, based on your current interest rate, the balance transfer credit card you can expect to qualify for, and the monthly payment amount that you can afford. The point of doing a balance transfer is to make debt less expensive and easier to pay off. So you should not do a balance transfer if your credit isn’t good enough to get a card with a low balance transfer APR and fee, or if you won’t be able to pay off most of the transferred balance before the card’s regular APR takes effect. Most balance transfer credit cards require at least good credit for approval and have high regular rates.… read full answer
To decide whether you should do a balance transfer, as well as which credit card is best for the job, use a balance transfer calculator. There are lots of numbers to crunch when considering a transfer, including introductory balance transfer APRs, regular APRs, balance transfer fees and annual fees. It’s hard to take everything into account without some help. You can also check for pre-approval from several issuers to see which cards you have the best chance of getting.
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.
You have moderate debt: The best balance transfer cards have minimum credit limits of $500 - $1,000, but 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. A few cards do not charge a transfer fee.
You have a payoff plan: Figure out what monthly payments you’ll need to make 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 are likely to affect your credit score, though not directly. While balance transfers themselves aren’t reflected on credit reports, and thus aren’t directly used to calculate credit scores, balance transfers can change your financial picture in ways that could alter your credit score temporarily.
You can use WalletHub’s … read full answerfree credit score simulator to forecast how a balance transfer might affect your credit score in particular. You can also learn more about how balance transfers affect credit scores in general below.
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.
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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