If you're struggling with credit card debt and high-interest rates, a balance transfer credit card can be a great option to help you save money and pay off your debt faster. With a balance transfer card, you can transfer your existing credit card balances to a new card with a lower interest rate and potentially save hundreds or even thousands of dollars in interest charges. However, with so many balance transfer cards on the market, it can be overwhelming to decide which one to choose. In this article, we'll explore some of the best credit cards for balance transfers and what you should look for when selecting one.
What to Look for in a Balance Transfer Credit Card
Before we dive into the top balance transfer credit cards, let's first discuss what you should look for when selecting one. Here are some key factors to consider:
Balance transfer fee
Most balance transfer credit cards charge a fee for transferring your balance. This fee is typically a percentage of the balance you're transferring, usually around 3% to 5%. While this fee can add up, it's still often less than the amount you would pay in interest charges with your existing card. When selecting a balance transfer card, make sure to factor in the balance transfer fee and compare it to the potential interest savings.
Introductory APR period
The introductory APR period is the length of time during which you'll pay little or no interest on your balance transfer. The longer this period, the more time you have to pay off your debt without accruing interest. Most balance transfer cards offer introductory periods of 12 to 18 months, although some may offer longer or shorter periods.
After the introductory period, the regular APR will kick in. This is the interest rate you'll pay on any remaining balance. Make sure to compare the regular APRs of different cards and choose one with a lower rate to save the most money in the long run.
Credit score requirements
To qualify for a balance transfer credit card, you'll typically need good to excellent credit. Make sure to check the credit score requirements before applying for a card to avoid a hard credit inquiry that could lower your credit score.
Rewards and other benefits
Some balance transfer credit cards also offer rewards or other benefits, such as cash back, travel rewards, or no annual fee. While these perks may not be your top priority when looking for a balance transfer card, they can still be a nice bonus.
The Best Credit Cards for Balance Transfers
Now that you know what to look for in a balance transfer credit card, let's explore some of the best options on the market.
Citi® Diamond Preferred® Card
The Citi® Diamond Preferred® Card is a top choice for balance transfers with its long introductory APR period and no annual fee. With this card, you'll get an introductory APR of 0% for 18 months on balance transfers and purchases, followed by a variable APR of 14.74% to 24.74%. There's also no balance transfer fee for the first 60 days after account opening. Additionally, the card comes with Citi Entertainment® for exclusive access to entertainment events and presale tickets.
Chase Freedom Unlimited®
While not specifically a balance transfer card, the Chase Freedom Unlimited® is a great option for those looking to transfer a balance while also earning rewards. The card offers an introductory APR of 0% for the first 15 months on purchases and balance transfers, followed by a variable APR of 14.99% to 23.74%. There's a balance transfer fee of 3% of the amount transferred, but the card also offers unlimited 1.5% cash back on all purchases with no annual fee.
The Pros and Cons of Balance Transfer Credit Cards
Before you dive into a balance transfer credit card, it's important to weigh the pros and cons.
Lower interest rates: Balance transfer cards often offer a lower interest rate for a limited time, making it easier to pay off your debt.
Consolidate debt: By transferring multiple balances to one card, you can consolidate your debt and simplify your payments.
Improved credit score: Paying off debt can improve your credit score, making it easier to get approved for other loans in the future.
Rewards: Some balance transfer cards offer rewards such as cash back or points for purchases.
Fees: Balance transfer fees are typically 3-5% of the amount transferred, which can add up quickly.
Short introductory period: The low interest rate on a balance transfer card is often only for a limited time, usually 6-18 months.
Temptation to spend: With a new credit card, there is always the temptation to spend more than you can afford, which can make your debt worse.
Credit score impact: Applying for a new credit card can have a temporary negative impact on your credit score.
How to Choose the Best Balance Transfer Credit Card
When choosing a balance transfer credit card, there are several factors to consider:
Introductory period: Look for a card with a long introductory period, ideally 12-18 months, to give you enough time to pay off your debt.
Interest rate: Choose a card with a low interest rate after the introductory period ends.
Fees: Consider the balance transfer fees and any other fees associated with the card.
Rewards: If you want to earn rewards on your purchases, look for a card that offers cash back, points, or other rewards.
Credit score: Make sure you meet the credit score requirements before applying for a card, as too many applications can negatively impact your score.
Tips for Using a Balance Transfer Credit Card
Once you have chosen a balance transfer credit card, there are several tips to keep in mind:
Pay on time: Late payments can result in fees and may cause you to lose the introductory interest rate.
Avoid new charges: Don't use the card for new purchases, as this can add to your debt and make it harder to pay off.
Create a payment plan: Have a plan to pay off your debt before the introductory period ends, and make sure you can afford the monthly payments.
Avoid maxing out the card: Keeping your balance below the credit limit can help maintain a good credit score.
Cancel the old cards: Once you have transferred your balance, cancel the old cards to avoid temptation and potential fees.
A balance transfer credit card can be a valuable tool for getting out of debt, but it's important to choose the right card and use it wisely. By considering the pros and cons, choosing the best card for your needs, and following these tips, you can take control of your debt and achieve financial freedom.