zero percent balance transfer credit cards
Unfortunately, finding the right balance transfer card isn’t as simple as identifying the no balance transfer fee credit card with the lowest transfer APR. As a general rule of thumb, as fees go up, rates go down and vice versa. Focusing only on no balance transfer fee cards or
is therefore ill-advised and you should consider the following factors in combination, rather than in isolation: 1)
Balance transfer fee, 2)
Length of 0% intro APR (if applicable), 3)
Regular balance transfer APR, 4)
Amount of monthly payments you can comfortably afford.
Your starting point should be to use a credit card payoff calculator
, and even though you do not yet know your balance transfer interest rate, you can use 10% in order to get a rough sense of how long it will take you to pay off your balance. The longer your expected payoff time frame, the more emphasis you should put on the regular APR. If you’ll be able to pay down the majority of your balance during the average low-interest period being offered, your balance transfer fee becomes more important.
In addition, be careful to avoid the following common balance transfer mistakes:
- Assuming balance transfer credit cards will be available: People often think they can just hop from 0% balance transfer card to 0% balance transfer card until their balance is no more. This strategy should not be relied upon though, as credit card companies do not always offer balance transfers, and you could get stuck paying interest rates north of 20%.
- Overestimating your ability to pay: This will lead to you having more debt exposed to your card’s regular rate than planned and could therefore cause you to apply for the wrong card.
- Forgetting that most regular APRs are variable: Given the current low-interest environment, variable rates can only go up.