Half of Americans carry credit card debt. (Source) If you’re one of them and your goal is to be debt-free, not paying interest on what you owe is a good first step. Consider moving your high-interest credit card debt to a balance transfer credit card. Balance transfer cards give you up to 21 months to focus on reducing your debt without paying interest, which could save you hundreds or even thousands of dollars.
Here’s a rundown of the five best balance transfer cards available in 2016. If you’re serious about paying off debt, consider these cards first.
Before we dive into the pros and cons of each card let’s tackle some basic questions about balance transfer cards.
What are balance transfer credit cards?
Balance transfer credit cards offer low-interest rates for a limited time on transferred debt. Their purpose is to consolidate debt and save you money on interest payments. The best balance transfer cards offer an introductory rate of zero percent for periods ranging from 12 to 21 months.
What does 0% APR mean?
The first thing you need to understand about balance transfers is that a 0% APR does not mean a balance transfer is free. Most balance credit cards charge a transfer fee that ranges from 3 – 5% of the debt balance. On a $15,000 debt, that’s $450 to $750 in transfer fees.
How to use balance transfer credit cards?
Balance transfer cards have great teaser rates. It doesn’t get much better than 0% APR. The problem is once the introductory rate expires, their standard rates are actually higher than those of your average credit card. As of October 2016, the average rate for a balance transfer card was around 18.5%. That’s more than two percentage points higher than the average credit card rate. (Source)
To make the most out of balance transfer credit cards follow these steps:
- Transfer all your high-interest debt to the balance transfer card with the longest introductory rate and cheapest transfer fee you can find.
- Pay off as much of your debt as you can within the teaser 0% APR period. Aim to pay the entire debt within the introductory period.
- If you still have a balance when the 0% APR expires, consider transferring your balance to a balance transfer card of another company. Don’t forget to include the cost of the balance transfer when working out whether a balance transfer makes sense for you
Who qualifies for a balance transfer credit card?
Balance transfer cards typically have large lines of credit and are only available to people with good to excellent credit. The eligibility criteria differ from card to card, but credit card companies typically look for consumers with:
- A solid credit history
- High credit scores
- And regular incomes
How to prepare?
You may have to work a little before you qualify for a top balance transfer credit card. Here are three things you can do to improve your credit score before you apply:
- Check your credit report and score. Don’t apply if you don’t meet the card’s minimum credit score requirement.
- Ask the credit bureaus to remove any negative items on your credit report that are not correct or accurate.
- Pay your bills on time.
Which is the best balance transfer card?
This list ranks balance transfer cards based on their potential for saving you money on interest payments. Scroll to the bottom of the page to see what methodology we used. The average American household has more than $7,000 in debt. (Source) We used that amount to compare how much you could save with each card assuming you previously had an average credit card APR of 16.28% (source).
However, the goal of a balance transfer credit card should be to become debt free. So, we also calculated what your monthly payments would have to be to repay $7,000 during the card’s 0% APR period.
Scenario assumptions: These savings are based on the interest you would pay during the introductory 0% APR period if you made no other payments on your debt. We take into account the balance transfer fee for each card so you can find the sweet spot of long 0% APR period and fees.
1. Citi Simplicity
Citi Simplicity has the longest 0% APR period of all balance transfer credit cards. As such, it offers the largest potential for saving money on interest payments.
Simplicity is true to its name. It doesn’t have late fees or an annual fee either. However, it does charge a 3% transfer fee.
The standard rates for this card vary from 13.24—23.24% APR based on your credit.
Find more details and users reviews in Citi Simplicity SuperMoney profile.
| Pros|| Cons|
|Example Scenario: $7,000 debt on a credit card with 16.28% APR. If entire amount transferred to Citi Simplicity card:|
2. Citi Double Cash
Citi’s Double Cash Card has the second longest 0% APR intro period (18 months) and offers 2% cash back on all purchases. There is no annual fee but you do have to consider a 3% transfer fee. Standard rates range from 13.49-23.49% APR.
Find more details and users reviews in Citi Double Cash Card SuperMoney profile.
| Pros|| Cons|
|Example Scenario: $7,000 debt on a credit card with 16.28% APR. If entire amount transferred to Citi Double Cash card:|
3. Chase Slate
Slate is the workhorse of balance transfer cards. It’s the only balance transfer card that doesn’t charge a fee on balance transfers. The only catch is the $0 transfer fee only applies to transfers made within the first 60 days of opening an account.
Once the intro rate expires, rates vary from 13.24-23.24% APR depending on your credit.
Find more details and users reviews in Chase Slate SuperMoney profile.
| Pros|| Cons|
|Example Scenario: $7,000 debt on a credit card with 16.28% APR. If entire amount transferred to Chase Slate card:|
4. Discover It
Discover’s It card offers generous signup bonus and reward as well as 18 months of 0% APR. There are no annual or foreign transaction fees, but there is a 3% balance transfer fee. Standard rates on purchases range from 11.24-23.24% APR.
Find more details and users reviews in Discover It SuperMoney profile.
| Pros|| Cons|
|Example Scenario: $7,000 debt on a credit card with 16.28% APR. If entire amount transferred to Discover It card:|
5. Chase Freedom Unlimited
Chase’s Freedom Unlimited is a good all-rounder balance transfer card that also works as a decent cash back card. You get an intro rate of 0% APR for 15 months, no annual fee, and 1.5% cash back on all purchases.
The catch is you have a 5% balance transfer fee. The standard rates range from 14.24-23.24% APR.
Find more details and users reviews in Chase Freedom Unlimited SuperMoney profile.
| Pros|| Cons|
|Example Scenario: $7,000 debt on a credit card with 16.28% APR. If entire amount transferred to Chase Freedom Unlimited card:|
SuperMoney ranked dozens of balance transfer credit cards based on the following features:
- Length of the 0% APR balance transfer period
- Balance transfer fees
- Annual and penalty fees
- APR on new purchases
- Signup bonus
- Reward rates
- Overall savings (assuming a 16.28% APR)
The result is a list of the five balance transfer credit cards that offer the most value to people who carry a credit card balance.
Balance transfer credit cards are an excellent tool to reduce your revolving debt. The 0% APR introductory rate periods give consumers the chance to reduce their debt without paying interest. Although 0% APR intro rates are a great deal, it doesn’t mean they are free. Most cards charge a balance transfer fee. The balance transfer credit cards reviewed above offer the best value to consumers looking for a long 0% APR period, low transfer fees, no annual fees, and generous reward rates. Not what you’re looking for? Check out SuperMoney’s credit card database for expert reviews and user comments on the best credit cards available.
SuperMoney’s credit card database makes it easy to filter hundreds of credit cards according to your preferences. Just select balance transfer cards under card type, click on your credit score, and see what options are available. Once you find a good candidate, click on the big green button and complete the application form.