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TIPS FROM THE MONEY COACH
A Credit Card Perks Column
Lynnette Khalfani-Cox, The Money Coach®, is a personal finance expert, speaker, and the author of more than a dozen books. She now works as a financial educator, helping Americans to better handle their money - especially managing credit and debt.

Tackle holiday debt with balance transfer credit cards

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Taking advantage of a good balance transfer offer is an excellent way to jump start your finances.

Ideally, transferring a balance from one credit card to another will shave your interest rate considerably and lower your monthly credit card bills. So, if you’re like most people shopping around for the best credit card balance transfer offers, you’re probably focused on the chance to save money by getting an ultra-low rate – or maybe even a 0 percent deal.

Here’s what you need to know about doing a balance transfer the right way – as well as some recommendations on where to get the best credit card balance transfers available.While it’s certainly smart to pay the least amount of interest possible, a credit card balance transfer also has one other major benefit that you may not have considered: When done right, balance transfers can protect your credit rating and may even boost your credit score. 

>> Related content: Compare balance transfer credit card offers side by side 

How a credit card balance transfer helps your credit score

Doing a credit card balance transfer can help preserve your credit health or even raise your credit score in three ways.

      1. If your credit card payments have become too high and you need a balance transfer with a lower rate to free up cash flow, the right balance transfer offer can give you some financial breathing room – and ensure that you don’t miss any payments, which would ding your credit score.

      2. A balance transfer gives you a new line of credit, which is often viewed favorably in the world of credit scoring.

        Why is this?

        Well, 30 percent of your FICO credit score is based on your credit card balances that are outstanding. Specifically, FICO scores – as well as VantageScores – take into consideration something called your “credit utilization.”

        That’s just industry speak for how much credit you’ve charged versus how much credit lenders have extended to you. For example, if you have just one credit card with a $10,000 credit limit and you’ve charged a total of $5,000, you currently have a 50 percent credit utilization rate.

        The way credit scoring systems work is that the lower your credit utilization, the higher your credit scores. So in this example, let’s assume you were able to pay down half of your debt and lower your credit card balance to $2,500. You’d then have a credit utilization rate of just 25 percent – giving you a nice jump in your credit scores.

        But that’s assuming you’ve got a pot of cash sitting around to throw a lump sum toward your credit card bills.

        What if you really don’t have the cash to pay off debt outright or to pay down a big chunk of it? That’s where a balance transfer can come in handy in terms of boosting your credit score. It’s always best to lower debt when possible. But when that’s not possible, shifting debt around can also be an effective way to increase your credit score.

        Assume you still have that $5,000 in credit card debt on a card with a $10,000 limit, but now you apply for and get a second card with a $10,000 credit limit.  Now you have a total of $20,000 in available credit on both your cards. But do the math and you’ll see that by adding that second card, you were able to lower your credit utilization to just 25 percent ($5,000 in charges to $20,000 in total credit limits).

      3. A final reason the balance transfer boosts your credit is that credit scoring systems look at how maxed out you are with each card. Carrying higher balances on individual cards is more damaging to your credit score than is spreading out your debts across multiple cards.

For all these reasons, a balance transfer can help you strengthen your credit rating – even if you don’t have the funds on hand to reduce your balances or wipe out your credit card debt altogether.

6 great credit card balance transfer deals

Let’s look now at where you can get a good credit card balance transfer offer.

Here are five great credit card balance transfer deals that can help you save money each month – and help you potentially boost your credit scores, too.

Chase Slate®

Chase Slate®: $0 intro fee on transfers made within 60 days of account opening, plus a 0 percent intro APR on balance transfers for 15 months.

Why take this deal? This is arguably the single-best all-around balance transfer deal you can find. Most credit card balance transfer offers come with a fee – typically 3- 4 percent of the amount you want to transfer. That can mean hundreds of dollars for a large balance transfer. But this sweet deal has no balance transfer fee at all for transfers you make in the first 60 days after opening your account, a relatively rare thing. Plus, it boasts a 0 percent intro APR on balance transfers and purchases for 15 months. To top it all off: If you want to keep tabs on your credit rating (and who doesn’t?), this card also gives you free FICO scores each month.

Learn more


Citi Simplicity® Card - No Late Fees Ever

Citi Simplicity® Card - No Late Fees Ever: 3 percent balance transfer fee; 0 percent APR for 21 months.

(Citi is a Cardratings.com advertiser)

Why take this deal? This is a great balance transfer card if you’re looking for a super long-term offer – 21 full months at 0 percent. Most other balance transfer offers typically involve 12-months-worth of interest-free payments, so this deal stands out from the crowd by letting you lock in a no-interest term for nearly two years. The upshot is that if you’re not done repaying your credit card debt in a year or so, you won’t have to scramble to find a new deal.

By the way, if the 21-month intro period appeals to you, but you'd also like a few extra perks, like access to 24/7 concierge services, check out the Citi® Diamond Preferred® Card. It, too, comes without an annual fee.

Learn more


Capital One® Quicksilver® Cash Rewards Credit Card

Capital One® Quicksilver® Cash Rewards Credit Card: 3 percent balance transfer fee; 0 percent intro APR for nine months.

Why Take This Deal? Let’s face it: not everyone has pristine credit and a blemish-free credit report. Maybe you missed payment or two a couple years back or perhaps you lost your job and ran late on bills, but now you’re bouncing back. If that sounds like you, take heart in knowing there’s a balance transfer that’s ideal for your credit circumstances. In fact, this Capital One balance transfer deal is a very good option if you have decent credit, but not necessarily excellent credit.

Learn more


BankAmericard® Credit Card

BankAmericard® Credit Card: 3 percent balance transfer fee; 0 percent APR for the first 18 billing cycles on transfers made within the first 60 days.

Why Take This Deal? The BankAmericard® Credit Card is an attractive option if you’re looking for a good balance transfer deal with no annual fee, a generous teaser rate period (18 billing cycles) and a competitive interest rate after the introductory 0 percent period ends. This card has all those features and then some.

Learn more


Discover it® - 18 Month Balance Transfer Offer

Discover it® - 18 Month Balance Transfer Offer: 3 percent balance transfer fee; 0 percent APR for 18 months.

Why Take This Deal? In addition to the solid balance transfer offer, Discover it® - 18 Month Balance Transfer Offer comes with loads of ways to turn your credit card purchases into all sorts of financial perks and rewards. You earn 5 percent cash back in various rotating categories, which have included restaurants, gas stations and even purchases from Amazon.com. The cash-back deal is good up to the quarterly maximum each time you activate. You also get 1 percent cash back on the rest of your purchases.

Discover it® - 18 Month Balance Transfer Offer


Wells Fargo Propel American Express® Card

Wells Fargo Propel American Express® Card: 3 percent balance transfer fee for the first 12 months, after that 5 percent; 0 percent APR for the first 12 months.

Why Take This Deal? The Wells Fargo Propel American Express® Card is a solid rewards credit card that comes with a just-as-attractive intro APR offer. If you're looking for a few extra months to pay off a big purchase, but you also like the idea of collecting cash back in everyday categories, this card could be for you. You'll earn three times points at U.S. gas stations, two times points at U.S. restaurants and one point per dollar spent on all other purchases. Plus, if you happen to have a qualifying Wells Fargo checking, savings or PMA package, you'll earn a 10 percent bonus on your accumulated points annually. All of this comes with no annual fee.

Wells Fargo Propel American Express® Card


If you do decide to go for it and pursue a strategic balance transfer deal, just remember a few guidelines.

3 tips when transferring balances from one credit card to another

Obviously, you’ll want to get a lower interest-rate deal than you currently have. But remember that a good balance transfer deal isn’t just tied to interest rates. Make sure the overall deal is good in terms of the rate, fees (such transfer fees) and other features of the card you’re being offered. It pays to carefully read the fine print.

Next, even though a balance transfer deal can help your credit score by lowering your overall credit utilization ratio, don’t go overboard with credit card applications. In fact, you should know that applications for new credit cards almost always generate inquiries on your credit report, which can temporarily lower your credit score. Rest assured that having that additional line of credit will usually more than make up for any small hit to your credit that results from the credit inquiry. That’s because, as mentioned, your credit utilization ratio comprises 30 percent of your credit score while inquiries only account for 10 percent of your score, according to officials from Fair Isaac, creator of the FICO credit score.

Still, you generally don’t want to apply for multiple cards all at once as that would result in multiple inquiries on your credit report. Do your research and select the best option for you.

Finally, don’t close out old credit card accounts. This is a common mistake many people make during or after the balance transfer process, but closing credit card accounts can backfire on you by actually lowering your credit scores.

Part of the reason for the drop is that 15 percent of your credit score is based on the length of your credit history so, even if you’re not using a card anymore, it’s usually best to just keep it open and maintain a longer credit history.

Interested in checking out more offers? Click here to compare balance transfer credit card offers side-by-side. 

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