January 28, 2023

Best Balance Transfer Credit Cards of June 2021

Besides helping you banish debt, balance transfer credit cards often have other appealing features. For example, some offer travel rewards or cash back rewards.

Your main goal should be to pick a card that gives you a long-enough promotional period and low fees. Many of the best balance transfer credit cards tend to be nonrewards cards that are created for people who prioritize paying down or paying off a balance.

As with most financial products, there is no one-size-fits-all solution, but taking these five steps can help you determine which card is best for you.

1. Compare promotional periods.

2. Review other balance transfer terms.

3. Look for other types of fees.

4. Calculate the benefit of a rewards program.

5. Understand cardholder benefits.

1. Compare promotional periods.

Choosing the card with the longest promotional period is often recommended, especially if you have a lot of debt and need more time to pay it off.

But if you can manage a shorter promotional period, you might find other balance transfer credit cards with another benefit, such as no balance transfer fee. This is why having an action plan is important to choose a balance transfer credit card that helps you meet your goals.

2. Review other balance transfer terms.

Several features may make one balance transfer card offer more appealing than another.

  • Zero percent APR promotion for new purchases: This can be a double-edged sword. If you plan to use the card to make purchases while you’re still paying down debt, a card that has a 0% APR offer on both purchases and balance transfers might sound perfect to you. But remember, there’s a dark side. Making purchases and increasing your balance makes becoming debt-free even more difficult.
  • Balance transfer fee: Some cards don’t have a balance transfer fee or waive the fee for a short period after you open a new account. Otherwise, you’ll usually have to pay 3% to 5% of each balance transfer. Be sure to read the fine print so you know how to proceed.
  • Regular APR: After the promotional period, any remaining balance will be subject to interest charges. This is the go-to interest rate for your balance. The balance transfer APR is often the same as the purchase APR, but your particular rate depends on your creditworthiness.
  • Balance transfer limit: You won’t know your new balance transfer card’s credit limit until you apply, but you can review the terms to see if there’s a maximum.
  • Types of debt you can transfer: Balance transfer credit cards let you transfer balances from other card issuers. If you want to transfer other types of debt, check with the issuer to see if it’s an option before applying.

How late payments affect the interest rate: Depending on the card, a late payment might end your promotional rate. A late payment often results in a fee, and being at least 60 days late could lead to a penalty APR on balances and future purchases. Set up reminders or automatic payments so this doesn’t happen to you.
3. Look for other types of fees.

Your efforts to pay down your credit card balance can be hindered by fees. You may be able to avoid these fees by choosing a card that either doesn’t have them or by not incurring them.

  • Annual fee: Annual fees can range from about $25 to more than $550. Some rewards credit cards waive the fee for the first year. If you’re trying to pay off a balance, try to choose a card that doesn’t have an annual fee unless other features offset the fee.
  • Late fee: Paying a bill late could end your promotional rate and result in a fee of up to $39.
  • Foreign transaction fee: Some credit cards charge 2% to 3% of the purchase price for transactions in a foreign currency or country.
  • Cash advance fee: If you use a credit card to withdraw cash or use a cash advance check, you have to pay a cash advance transaction fee. Depending on the method you use, the fee will be up to 8% of the amount withdrawn, with a $5 to $10 minimum. The APR for cash advances is higher than your purchase APR, and interest starts accruing when the transaction posts to your account. Don’t get a cash advance because it will only add to your debt and stress.

4. Calculate the benefit of a rewards program.

Some rewards credit cards, including travel rewards and cash back rewards cards, have balance transfer offers. By using a rewards card you’ll get point, mile or cash back rewards for each purchase you make. You won’t earn rewards for balance transfers.

Depending on the card, you can redeem rewards for travel, statement credits, gift cards, merchandise or other items. Although nonrewards cards tend to have the longest promotional periods, some rewards cards offers are competitive. It pays to think ahead and see if a particular balance transfer card is one you can use for rewards after you’re out of debt.

You should always pay off your balance before using your card to make purchases or earn rewards. A rewards program may encourage you to make purchases, but paying off purchases and paying down the balance before the promotional period ends may be difficult. Also, if your card doesn’t offer a 0% APR period for purchases, your purchases may not receive a grace period, and that means interest starts accruing immediately.

One exception might be using a rewards credit card for essentials such as gas and groceries to earn cash back rewards to help you pay down your balance. You only want to consider this approach if the rewards card has a 0% APR offer on purchases to ensure that you don’t accrue interest while you pay off your balance transfer. Still, it’s a dangerous thing to do while you’re still in debt.

Also, consider the rewards card’s sign-up bonus. You may be able to spend enough to qualify for a large sign-up bonus, pay for the purchases, apply your sign-up bonus value toward your balance, and then stop using the card for purchases until your balance is paid off. This approach takes self-discipline, but if you have that, go for the bonus. And when you’ve earned it, put your balance transfer card in a drawer.

5. Understand cardholder benefits.

Balance transfer cards may come with additional perks or benefits. A card may offer benefits such as an extended warranty coverage, travel accident insurance, theft and fraud protection, concierge service, or access to your credit score.

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