Balance Transfer Credit Cards

By: John Kiernan, Credit Card Editor
A balance transfer is a way to reduce the cost of existing debt and repay it sooner than you would otherwise. In theory, you can transfer the balance remaining on any loan or line of credit to most any credit card. But certain offers are classified as “balance transfer credit cards” because they have relatively low APRs and fees for this type of transaction.

You will always have the option of requesting a balance transfer when you apply for a new credit card. And you should be able to submit such a request with an existing account, as long as you aren’t already carrying a balance from month to month. Just bear in mind that certain account terms, such as 0% intro APRs and $0 transfer fees, may only be available for a limited time after account opening.

When you’re comparing balance transfer offers, it’s worth calling your current credit card’s issuer to see what it can offer. Say that you plan on doing a balance transfer, unless you are given a significantly reduced interest rate. Your rate won’t be reduced to 0%, but even a slight APR reduction will help you save while your application for a 0% transfer is processed.

For more information, check out WalletHub’s balance transfer guide.

By: John Kiernan, Credit Card Editor

All major credit card companies allow you to transfer a balance from another issuer’s credit card but not from one of their own. Some issuers also allow you transfer other types of debt, such as a balance from an auto loan, student loan, payday loan, mortgage, etc.

You can check out WalletHub’s Balance Transfer Study to see each major issuer’s policies. But we’ll highlight Chase, Bank of America and American Express here, as they offer some of the best balance transfer credit cards on the market.

• Chase – Credit card debt only
• Bank of America – All consumer debt
• American Express – Credit card debt only

No matter what type of balance you transfer, make sure to use a balance transfer calculator to plan your payments and confirm you’re getting the best deal.

By: John Kiernan, Credit Card Editor
Not really. The fees and APRs that your balance transfer credit card charges are far more important than the company that issues it or the network it’s on.

The issuer of your balance transfer credit card really only matters when it comes to rewards and customer service. Most credit card companies will not reward you with points, miles or cash back on transferred balances. But some do, at least with select cards. Furthermore, each major credit card issuer has its own distinct reputation. However, even the best rewards can’t stand up to a hefty balance transfer fee. And besides submitting your application and monthly payments, you probably won’t have much to do with the issuer of your balance transfer credit card. So better terms trump better customer service in most cases.

Your balance transfer card’s network (i.e. Visa, Mastercard, Discover or American Express) is even less important than its issuer. Card networks simply dictate where you can make purchases. And it’s best not to make purchases with a balance transfer credit card. If you do, interest will begin accruing immediately, since carrying a balance from month to month removes your grace period.

By: John Kiernan, Credit Card Editor
Balance transfers usually take 15 to 25 days from when you submit a balance transfer credit card application. In the meantime, it is very important that you continue making payments toward the balance being transferred, which you should send to your original creditor. If you don’t, your balance could be classified as past-due, damaging your credit standing and perhaps putting the transfer into doubt.

Once the credit card transfer is finalized, you will see a credit listed on your original account, as if a payment was made. And a corresponding balance will be listed on your balance transfer credit card account. Remember, unless you have a 0% transfer card, interest will start to accrue as soon as your balance gets transferred.

For more information, check out WalletHub’s guide on how balance transfers work.

By: John Kiernan, Personal Finance Editor

A balance transfer fee is exactly what it sounds like: A fee charged for transferring debt from a loan or line of credit to a credit card. Most balance transfer credit cards have transfer fees. And these fees are typically listed as either a percentage of the amount transferred or a minimum dollar amount, whichever is higher.

The average balance transfer fee is just over 3% of the amount transferred, according to WalletHub’s latest Credit Card Landscape Report. But some cards charge as much as 5%. On the other end of the spectrum, some of the best balance transfer credit cards don’t have balance transfer fees.

For more information, check out WalletHub’s balance transfer guide.

By: John Kiernan, Credit Card Editor
The value of a balance transfer card depends on four main factors:

1. Balance transfer fee

2. Introductory APR for transfers

3. Length of the introductory period

4. Regular APR (applies once the intro terms expire)

It can be difficult to balance all of these terms. So we recommend using a balance transfer calculator. This will help you determine not only how long it will take you to pay off your balance, but also which balance transfer credit card will save you the most money.

If you anticipate being able to repay your full balance within a card’s 0% intro period, you can focus on avoiding a balance transfer fee. The regular APR won’t affect you, after all.

But if you don’t think you’ll be approved for a card with a long enough 0% intro period to repay your full balance, the regular rate will indeed come into play. And the card with the longest introductory period won’t necessarily be the best balance transfer credit card for you. So you’ll have to compare the cost of paying down what you owe with each card you’re considering. And you’ll need to take into account how much you expect to owe at the end of each card’s 0% period as well as how expensive that amount will be, in light of each card’s regular APR.

Finally, don’t make the mistake of assuming another balance transfer credit card will be available to bail you out if you don’t reach debt freedom by the time regular rates take effect. Many people learned this lesson the hard way during the Great Recession.

By: John Kiernan, Credit Card Editor
No balance transfer is guaranteed to be free, but some credit cards do offer the potential for a free balance transfer from time to time. More specifically, it’s not unheard of for a credit card to offer a 0% intro APR on transfers without charging a balance transfer fee or an annual fee. So if you get such a card and repay what you owe by the time regular rates take effect, you’ll have yourself a free transfer. But if you have a balance remaining at that point, or you miss a monthly minimum payment along the way, you’ll end up paying interest.

Free balance transfer credit cards are not common, though. Chase Slate® is a notable example. But there used to be far more options. Now, banks tend to offer either no balance transfer fee credit cards or 0% balance transfers, but not both.

By: John Kiernan, Credit Card Editor
Zero interest balance transfer cards are usually available. But how many offers there are and how easy they are to get vary based on the economic climate. When times are good, 0% balance transfer credit cards are pretty common because credit card companies can afford to offer attractive terms to attract draw in new customers. People with fair credit may even have a shot at getting a 0% transfer card in such times.

But 0% transfer offers tend to be much rarer during tough times. And those that do exist may be reserved for people with excellent credit. For example, during the worst of the Great Recession, it was nearly impossible to find 0% balance transfer credit cards because most issuers did not want to add indebted customers to their portfolios.

A transfer request’s timing in relation to when you apply for a card also is quite important. In most cases, you will have to ask for a transfer when you submit a credit card application or within 30-60 days of doing so, if you want to get the advertised terms. So we recommend having both the amount you wish to transfer and your current card’s account number ready when you submit a balance transfer credit card application.

By: John Kiernan, Credit Card Editor
It’s fine to buy things with a balance transfer credit card for as long as it offers 0% interest on purchases. But if your card does not offer 0% on purchases, or this introductory rate has ended, making purchases could prove very expensive.

Whenever you carry a credit card balance from month to month, there is no grace period for new charges. That means finance charges begin to apply as soon as you swipe your card. A 0% purchase APR protects you from this temporarily. But if you don’t pay off what you spend by the time regular rates take effect, interest charges will quickly eat away at your savings.

By: John Kiernan, Credit Card Editor

The amount that you can transfer to a credit card depends on the credit limit you’re approved for. A balance transfer entails using your new credit card to pay off a debt owed on another account, usually a credit card from a different issuer. So you can generally transfer as much as your available credit – your limit, minus amounts owed – will allow.

It’s frustrating that you won’t know how much of your balance you’ll be able to transfer before applying for a balance transfer credit card. But a credit card company can’t tell how big of a credit line you’ll qualify for before thoroughly reviewing your credit history, income and debt obligations. Some credit cards may list the minimum credit limit you will get if approved in the terms and conditions, though.

 

By: John Kiernan, Credit Card Editor

A credit card balance transfer is a good idea if you have good or excellent credit and make an affordable payment plan prior to applying. You generally need good credit or better to get a 0% balance transfer credit card. And most balance transfer cards have very high regular APRs, making it important to repay what you owe before the 0% period ends.

You can use WalletHub’s balance transfer calculator to compare the cost of repaying what you owe with your current card versus taking advantage of the best balance transfer offers. You can also check your latest credit score for free on WalletHub, the only site with free daily updates.

By: John Kiernan, Credit Card Editor

There’s generally no limit on the number of balances you can transfer to a single credit card. But the total dollar amount of your transfers cannot exceed your available credit. Furthermore, 0% introductory balance transfer APRs only last for a certain number of months after account opening. The clock does not reset each time you transfer a new balance.