Years ago, balance-transfer deals enabled consumers to surf their debt from lender to lender, minimizing finance charges along the way. Banks used the technique as a way to lure potentially profitable customers away from their competitors. Consumers could leverage their relationships to keep their APRs low. If you missed a payment or exceeded your credit limit, banks could cash in on hefty penalty rates and service charges.
However, the credit crunch of 2008 changed how most of us manage our debt. As Federal Reserve statistics indicate, many of us slashed our balances. At the same time, megabanks merged and cut down on new lines of unsecured credit. Instead of aiming for customers who could generate the biggest finance charges, lenders started hunting for cardholders with predictable spending and saving patterns. Even after banks ramped up lending again, most of us kept our credit card balances in check.
Therefore, many of the balance-transfer deals you see today are designed to attract consumers who really want to pay down their debt by a specific deadline. In our opinion, the best credit cards for balance transfers often include:
- Low introductory rates. If you've already cycled through balance-transfer deals from all of the major, national lenders, look at strong regional banks and credit unions with offers designed to build their brand recognition.
- Fixed interest rates or discounted APR ranges. Although fixed APRs are almost impossible to find on general purpose credit cards these days, a few credit unions and regional banks promise to lock an interest rate for the life of your balance transfer. Most other lenders offer no-frills cards that trade bonus features and perks for variable APRs a few percentage points lower than the market average.
- Waived or lowered balance transfer fees. Over the past few years, many banks have pushed their profit to the front end of each balance transfer by charging processing fees that often range between 3 and 5 percent. Certain offers can reduce or eliminate those fees, also cutting down the finance charges you'd pay over the life of your balance.
- Budgeting, credit monitoring, and financial-management tools. In decades past, some bank executives would have viewed balance transfers as potential profit centers, designed for consumers who paid just the minimum monthly payment. After the fallout from 2008's credit crunch, balance transfers play a different role for lenders.
The cards on our list of the market's best balance-transfer deals possess some, if not all, of the aforementioned attributes.
Billing Slate as a source for "simple and convenient" money management, Chase has developed one of the country's highest-profile balance-transfer credit cards. Slate's current offer includes a zero-percent introductory APR for 15 months on both balance transfers and purchases (after that introductory period ends, a variable APR of 12.99, 17.99 or 22.99 percent - depending on creditworthiness -- applies on balance transfers and purchases).
Chase Slate also offers an introductory $0 balance-transfer fee for transfers made during the first 60 days with the card. After that, you'll pay 3 percent of the amount transferred on future balance transfers with a minimum charge of $5.
Slate also includes access to Blueprint, an online tool that allows Chase cardholders to plan how to pay down debt over time. One of Blueprint's features, "Finish It," lets customers set their own deadline for reaching a zero balance. The software then suggests a new monthly payment to hit that deadline. On the other hand, a consumer budgeting a specific amount toward their debt can use the tool to project how long it might take to reach a zero balance.
While competing credit cards often highlight money-saving offers as a reason to switch lenders, Discover it marketing campaign suggests that consumers aren't always getting the customer service they deserve. Over the past few years, Discover has staffed up an entirely U.S.-based service and support team, empowering them to answer phones without forcing customers through complex, automated queuing tools.
Discover's recent balance-transfer offer features a zero-percent introductory APR on balance transfers for 18 months. An introductory zero-percent APR on purchases also applies, for six months. A variable APR of 10.99-22.99 percent, for both balance transfers and purchases, applies after the introductory period ends. A 3 percent fee applies to each balance transferred.
Unlike typical balance-transfer cards, Discover it offers access to cash-back rewards of up to 5 percent on qualifying purchases. A Discover Deals website, stocked with online shopping rebates of up to 10 percent at participating merchants, rounds out this card's strong feature set.
NASA Federal Credit Union Platinum Advantage Rewards
Although this credit union primarily serves employees of NASA and about 900 affiliated technology companies, if you can qualify for their Platinum Advantage Rewards credit card, and you'll lock in an extremely rare, fixed introductory balance-transfer APR that's among the lowest interest rates on the market.
This card currently offers 7.9 percent APR for balance transfers made within 90 days of account opening, based on creditworthiness. That 7.9 percent APR will remain in effect for the life of balances transferred within the first 90 days of account opening. The variable APR for purchases and any amounts transferred after the first 90 days falls is 9.9-17.99 percent, based on creditworthiness. With no annual fee and no balance-transfer fee, this deal can help you save an extraordinary amount of cash if you've got a strong credit history, but you've already cycled through the big banks' zero-percent APR transfer deals.
The country's first "crowdsourced credit card" has evolved since its launch a few years ago. Since then, cardholders have used Barclaycard's online forums to vote for new features and to brainstorm new experiments. Late last year, customers and brand managers agreed to start testing some new balance-transfer deals as a way to bring more cardholders into their community.
The card's current offerings include a low variable APR of 8 percent for both balance transfers and purchases, no balance-transfer fees and no annual fee.
Although PenFed still has "Credit Union" in its full name, this nonprofit has grown into one of the country's largest financial institutions. It's using that clout, and its deposit base, to offer some consistently low interest rates for families with strong credit. This no-frills Visa card offers straightforward terms, no annual fee, no balance-transfer fee, and no penalty rate if you accidentally miss a payment.
The current offer includes a 4.99 percent promotional APR for 12 months on balance transfers made between Jan. 1 through Jan. 31, 2015. After that, the variable APR for the unpaid balance and any new transfers will be 7.99-16.99 percent, based on creditworthiness. It's worth noting that credit union membership is a requirement but not a guarantee than an applicant will be approved for this credit card.
This new crop of balance-transfer deals isn't designed for consumers who want to get deeper into debt by racking up new purchases on cards that get paid off. In fact, qualifying for any of the cards above requires a credit history that includes consistent, on-time payments. If you're ready to get serious about debt reduction, these deals might help you get started.
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