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What kind of credit card user are you? | Common balance transfer credit card terms and features |
Best practices for comparing balance transfer credit cards | Final thoughts when comparing balance transfer credit cards | Compare offers

Balance transfer credit cards are one way to get out from under the weight of paying high interest on a credit card debt you already have. They allow you to transfer an existing balance to a card with a lower or even 0 percent interest rate, and pay down debt more quickly and with far less interest money out of your pocket.

But how do you go about comparing balance transfer credit card offers? Is it as simple as looking for one with the longest, 0 percent APR? Well, maybe; but it’s more likely that you’re going to need to look at some fine print, as well as consider your credit history and credit card  needs/expectations.

When it comes to balance transfer credit cards, many of them are no-annual-fee cards that lack rewards, but do offer stellar opportunities to get out of debt; on the other hand, there are also a bunch of options that offer you the chance to rack up credit card rewards, though sometimes (not always!) with slightly shorter 0 percent periods.

And deciding whether you want a rewards card is just one of the things you’ll want to consider as you compare cards. So let’s jump into the process by asking what should be a pretty straighforward question…

What kind of credit card user are you?

Choosing a credit card depends what you want from a card, sure, but your credit history and score certainly has an impact on your options. That’s why it’s a great place to start when you’re comparing any credit card options, including balance transfer cards.

Balance transfer credit cards usually require good or excellent credit. The credit card company is taking a risk by letting you transfer a balance to their card, and they understandably want to make sure you’re a good credit risk to take. That’s why most will only give you a balance transfer credit card if they think you’ll make regular payments.

Before applying for a card, know your credit score. If you already have a credit card, it’s possible one of the perks of that card is a free FICO or other credit score each month (it’s become a fairly common feature of many top credit cards).

It’s also a good idea to keep an eye on your credit report, which keeps a record of your credit history. You can request a free credit report once a year, so take advantage of that offer.

Once you know your score, be sure to think about other financial elements that influence whether a bank views you as a safe or risky consumer. For instance, a person with an average credit score, but a solid income stream is probably going to be more appealing to anks than a person with an excellent credit score and no steady income.

Once you know and understand your own financial history, you can use tools like CardRatings’ Compare Cards section, which list a general range of credit required for each card, to start narrowing down your list of options.

You’ll also want to find a credit cards that matches your needs, interests, lifestyle and spending habits. Sure, you’re looking to compare balance transfer offers, but some of those balance transfer cards also offer cash back or travel rewards, along with other perks and features. Furthermore, if the card you like charges an annual fee – that generally only applies to rewards cards – you want to make sure you can offset that fee with the rewards you’ll earn.

Which card is best for you depends on your interests and how you use your card. If your primary goal is to lower your debt, it’s best to find a card with generous balance transfer and low APR offers. If your credit is solid, you can always focus on finding a great rewards card later on.

Common balance transfer credit card terms and features

Figuring out which credit card is right for you is a process. You have to know yourself and you have to know the cards you’re comparing. Yes, that means digging into the fine print and relying on tools and comparisons through sites like CardRatings to help you in the process.

Here are some credit card, particuarly balance transfer credit card, fine print elements to know:

  • Annual fee – This is what many credit card companies charge a cardholder each year for the convenience of carrying the card. Annual fees are fairly common on rewards credit cards and less common on cards that simply offer low introductory interest periods, but no rewards. Many cards with an annual fee waive the first year’s charge. It’s a good idea to weigh whether the card’s benefits are worth the yearly charge. If you collect $200 worth of travel credits in a year, but spend $50 for an annual fee, the card is likely worth it.
  • Balance transfer fee – This is what you pay when you move a balance from one card to another. The fees are often in the 3 percent to 5 percent range, but you may find a card that waives balance transfer fees, at least for a period. To figure out how much you will spend on a balance transfer fee, multiply the balance you’re transferring by the fee percentage. For example, transferring a $5,000 balance and paying a 3 percent fee ($5,000 x .03) means you’ll pay a $150 balance transfer fee. It seems like a lot, but you need to weigh the balance transfer fee in light of the lower APR on the new card. It’s quite possible that the fee pales when compared to leaving your balance on a high-interest card and payin on that over the course of many months.
  • 0 percent/low APR on balance transfers and/or purchases – Some credit cards offer introductory offers that either reduce or completely wipe out APRs on balance transfers. Another card might only do that for purchases. And still others do both. Read the fine print to compare each card’s special offers. Pay very close attention to the duration of each offer as a card could offer 12 months of no interest on purchases, but 18 months of no interest on balance transfers. Furthermore, take note of when you need to make the transfer in order to take advantage of the offer; in many cases, the 0 percent rate only applies to balance transfers completed within the first 60 days or so of opening the account.
  • Transferring balances to the same company – Credit card issuers generally don’t allow you to transfer a balance from one card to another within the same company. If you have a Chase credit card, in other words, you won’t be able to transfer the balance to another Chase card.
  • Foreign transaction fees – Some credit cards charge a fee if you make international purchases. The fee is often 3 percent, which doesn’t sound like much but it can add up. If you travel outside the country and spend $1,000 and your card has a 3 percent foreign transaction fee, you’ll have $30 added to your bill. There are plenty of cards without foreign transaction fees. It’s best to review those cards if you travel internationally and plan on using that card. This is handy to keep in mind if you’re comparing balance transfer cards with the intention of using overseas soon.
  • Usability – Where and how you can use your card play an important role. For instance, Mastercard and Visa are accepted more widely than American Express and Discover (though both are adding merchants all the time). You’ll want to keep this in mind when choosing a credit card. Here in the U.S., you’ll have pretty wide acceptance no matter which you choose.
  • Budgeting tools/account reminders – Some credit cards offer online budgeting features. For example, it tracks the card’s spending history and educates you about your debt and how to pull yourself out of it. Cards can also send alerts, such as due date reminders and balance and spending notifications. These alerts notify you when you’re close to your due date, if your balance reaches a certain level, when you use your card or if there is potential suspicious activity. The notifications help you stay on top of your account. And, with a balance transfer card, your goal should be to pay off your balance in full before the 0 percent/low interest period expires, which means getting regular alerts reminding you to pay your bill, etc. could be quite helpful. Furthermore, in some cases, a credit card company will cancel your 0 percent period if you miss a payment, which means you’d instantly lose the benefit of a balance transfer card.
  • Free FICO scores – We mentioned earlier that many cards these days offer this perks, but it’s worth repeating: One way to keep track of your credit score is to get a card that offers free FICO scores. These cards may also alert you if there is suspicious activity on your card or credit history. Many of them have apps, so you can track the information conveniently on your mobile device.
  • Automatic payments – These makes a lot of sense given that you’re trying to pay off a balance within a specific period of time. Just set up how much you want to pay each month, ensure you always have enough in your account to make the payment and you’ve mastered the art of a balance transfer credit card.

Best practices for comparing balance transfer credit cards

Now that you understand better what balance transfer credit cards are all about, it’s time to actually start making some comparisons. Take a look at these tips:

Figure out when you plan to transfer a balance.If you don’t expect to do it for six months, make sure the introductory period on the card your eyeing allows you to make a transfer for that long. Many limit you to making a transfer within the first 45 or 60 days in order to take advantage of the intro period.

Do the math. What we mean is that you should consider your full balance plus any balance transfer fee and then look for a card that offers a 0 percent period long enough for you to pay off as much of that balance as possible before the intro period ends. Use tools like the CardRatings Credit Card Payoff Calculator to determine how much you’ll need to pay each month in order to pay off your balance then look for a card that offers you at least that long of a period.

Check out the fees. Remember to take any annual fees and/or balance transfer fees into account as you compare offers. If it’s important to you, check to see whether there are foreign transaction fees to consider.

Notice any penalties. What happens if you miss a payment? Is there a fee or does your 0 percent intro offer disappear? Obviously, you want to make every payment on time, but life happens. Make sure you know what to expect if you miss a payment.

A rewards card is a great perk, but remember the main balance transfer credit card goal is to reduce your debt. Find the best balance transfer card to get rid of your debt, and appreciate the opportunity if your best option also happens to be a rewards card (as long as rewards you can earn would offset an annual fee if the card charges one). By the way, balance transfers are not going to earn you rewards or count toward the spending threshold required to earn a signup/welcome bonus. In other words, don’t transfer a balance hoping for mega rewards; it simply won’t happen.

Look for a card with budgeting or debt tools. You don’t want to fall back into massive credit card debt. Use your situation as a learning experience. Search for cards that provide cardholders with tools to help you manage your finances going forward.

Final thoughts when comparing balance transfer credit cards

Whatever you decide after doing your research, remember that a balance transfer credit card could be an excellent tool for getting out of debt that you already have, but it isn’t a substitute for solid budgeting and living within your means. Consider the card a chance to get on track and then make every effort to stay there.

Here are few final tips for really making the most of your new balance transfer card so that you set yourself up well for the future:

Don’t count on being able to transfer your entire balance. It’s possible that you could be approved for a credit limit that is less than what you need to transfer your entire balance. Make sure that you continue paying on both cards until your balance is $0; hopefully, whatever is left over on your old card will be small and you can knock it out quickly.

Similarly, keep paying your original card balance until the transfer is finalized.A transfer can take seven to 10 days. You don’t get a free month when you transfer your balance so make sure you make your payment or it will hurt your credit and likely result in a late fee. As we mentioned earlier, some issuers will even cancel your 0 percent period if you miss a payment.

DON’T cancel the other card, but DO make a plan for staying out of debt.It may seem like a good idea to get rid of the temptation to spend that your old card offers, and if it truly is too much a temptation to resist, than you should cancel it. That said, canceling an old card could hurt your credit since you are potentially shortening your credit history and you are definitely negatively impacting your credit utilization ratio, that is, the amount of credit available to you compared to the amount of debt you have. Instead of canceling the old card, consider putting it away for awhile until you’re out of debt. Even more importantly, make a budget and stick to it. Getting out of debt is why you are comparing balance transfer cards to begin with; do your best to stay out of debt going forward.

Set up automatic payments. Creating these automatic payments will assure you don’t miss a payment. Try to set it up so you pay off as much of your balance as possible before the introductory period ends. If necessary, you can often set up multiple payments in a single month so that they align with your pay days or other bills. Remember, the goal is to pay off this debt so take advantage of all the tools available to help you do that.

By Brooklyn Lowery Editor & Credit Card Expert |  updated on June 13, 2024