CardRatings.com reviewed balance transfer offers from a selection of prominent lenders, reflecting the options a typical American consumer might find when shopping for the best credit card deal online. Of the 17 credit cards we surveyed, 15 offer a promotional APR of zero percent on balance transfers, a slight improvement from our 2012 review. Since that time, the length of promotion periods has grown even longer, ranging from 12 months (Bank of America, Iberiabank, U.S. Bank and Wells Fargo) to 18 months (Citi and Discover).
Low introductory APRs often apply to new purchases
Thirteen of those 15 cards extend the same zero-percent APR deal to new purchases during the same introductory period. These deals don't appear at the start of the holiday season by accident, however. To lure new customers away from their competitors, credit card issuers try to assemble packages that can help consolidate existing bills while enabling shoppers to spread out the cost of year-end gifts and travel.
All but one of the cards in our survey carried no annual fee. However, IberiaBank Visa Select offsets its $35 annual fee with a go-to APR range nearly half that of most cards in the study. Only the PenFed Promise Visa, with a promotional 4.99 percent fixed interest rate for the life of a transferred balance, on transfers made Oct. 1 through Dec. 31, 2013, beat IberiaBank's lower-than-average APR.
For applicants with excellent credit, the permanent, variable APR of the cards in our survey averaged at about 11.5 percent, based on the prime rate in effect at the time. Average-to-good credit could result in an APR at the high end of a bank's scale, averaging just over 21 percent during the survey period. The Prime Rate remains near generational lows, but gradual improvement in the overall economy could send variable APR's creeping higher within the next few years.
Locking in a low APR
Regardless of the length of a card's introductory period, most banks require you to transfer balances within a fairly short time frame after opening your new card. Missing that deadline means paying the much higher standard rate on your balance transfer, often the same as a cash advance rate.
Just two of the cards in our survey (Blue Cash Everyday Card from American Express and U.S. Bank Visa Platinum Card) require a tight, 30-day turnaround to process eligible balance transfers. Discover, Capital One and Pentagon Federal set specific cutoff dates for consolidating balances. Capital One offers the most lenient time frame, well over a year for early bird applicants. The remaining banks require balance transfers to settle within either 60, 90 or 120 days from initial approval.
Balance transfers with zero fee
While banks love to tout their zero introductory APR deals, many lenders have instituted new service fees that may seem unfamiliar if you haven't transferred a balance since 2008. Fifteen of the cards in our survey charge an upfront, 3 percent balance transfer fee. BankAmericard Visa charges the highest minimum balance transfer fee at $10, while Citi and U.S. Bank require at least a $5 fee on their cards. None of the offers in our survey impose a cap on the fees they charge for balance transfers.
The Slate from Chase card has an introductory balance transfer offer where you pay no balance transfer fee for balance transfers completed within 60 days of account opening. The balance transfer fee after that is 3 percent with a minimum of $5. PenFed Promise Visa also offers no balance transfer fee, making its promotional 4.99 percent fixed APR especially attractive to consumers who want to pay down credit card debt over a period of more than two years.
Three tips to preserve your cash after a balance transfer
During the balance transfer process, you could miss out on some important benefits if you fail to follow some of our editors' key tips:
- Use a credit card calculator to work out just how much you'll save with the right balance transfer deal. A slightly higher go-to rate after a longer promotional period could still save you money, as long as you remain disciplined enough to clear your balance on schedule.
- Keeping your old card open after a balance transfer can improve your overall credit utilization, a key metric that many credit score algorithms use to measure your borrowing power. If you're tempted to shop again, close the account. You'll still earn some points for the age of your original account and your ability to pay it in full.
- Watch for any fine print in your balance transfer deal that signals a retroactive finance charge for the amount of your original transfer if you fail to pay it off before the end of your promotional period. The Consumer Financial Protection Bureau has signaled its displeasure with such deals, common among retail credit accounts and credit cards for fair credit.