Paying too much in credit card interest is not fun and you will definitely want to look for a way that will help you avoid paying credit card interest while paying off your debt. A balance transfer is that money-saving option to help you. Before we get into the depths of a balance transfer process, you should understand what a balance transfer is.
What is a balance transfer?
A balance transfer is a transaction that allows you to move full or a part of your balances from your credit card (or cards) to another card with a lower interest rate. The point of performing a balance transfer is to pay off your credit card debt at a lower APR or no interest rate. The most reasonable balance transfers are transfers to a new credit card that offers a long 0% intro APR period because this way you will be able to save the most money in the long run. It should be noted that balance transfers cannot be completed between credit cards that are issued by the same bank.
How does a balance transfer work?
Credit card balance transfers are actually rather simple and easy to complete. Here are three steps with all details that outline a balance transfer process. Read on to see what actions you need to take in order to complete a balance transfer.
1. Apply for a new balance transfer credit card
When you are thinking of a balance transfer, a new credit card with 0% intro APR on balance transfers is the best choice. As you are looking for a balance transfer credit card, your first priority should be credit cards with a long 0% intro APR and a low balance transfer fee. A standard balance transfer fee is 3% of the amount transferred, but sometimes this fee can be up to 5% of the amount transferred. There are only a few credit cards with no balance transfer fee, meaning you don’t have to pay any fee to transfer the balance, however, you should note that paying a balance transfer fee isn’t always a bad thing. Depending on the balance transfer credit card you choose, you still can save on a balance transfer even if you pay a balance transfer fee. If not, then that balance transfer credit card isn’t a fit for you.
If you are not sure where to start and need some help finding the best credit cards for balance transfer, here we’ve picked up some of the best credit cards for balance transfer below.
Best for Average to Excellent Credit
Even if your credit is less than perfect (credit scores of 670 or higher), you may qualify for the Discover it® Balance Transfer credit card. The card has an 18-month 0% intro APR on balance transfers and 6-month 0% intro APR on purchases. The balance transfer fee is standard - 3% of the amount transferred. When the introductory rates are over, ongoing interest rates will apply. The card also allows to earn cash back on all purchases and has no annual fee, which means you may want to keep it after the balance is paid off. Cash back rewards are pretty simple: you will earn up to 5% cash back in rotating categories each quarter you activate (up to the quarterly maximum), and all other purchases will always earn 1% cash back. In addition to these credit card benefits you will have free access to your FICO credit score through Discover’s online portal.
Longest 0% Intro APR on Balance Transfers
For those who need 0% interest for more than a year and a half, the Citi Simplicity® Card - No Late Fees Ever card will be a good option. It offers whopping 21-month 0% intro APR on balance transfers made in the first 4 months! Although the balance transfer fee is a bit high – either $5 or 5% of the amount of each transfer (whichever is greater) – the fee may be worth it. Just see how much you can potentially save during that long introductory period to understand the difference. The Simplicity card also has no annual fee and you won’t be charged a late payment fee or penalty rate if you are late with a monthly payment. Note that the ongoing APR will be 15.99% - 25.99%* (Variable)
The Citi® Double Cash Card – 18 month BT offer card offers 18 months of 0% intro APR on balance transfers. You’ll have more than a year until a go-to APR of 15.49% - 25.49%* (Variable) comes into effect. The balance transfer fee is rather low – 3% of each balance transfer you initiate. There is no annual fee for the card. It also allows to earn cash back on purchases, so this is a good card to keep after the transferred balance is paid off. A decent credit card with a decent rewards program can help you continue building your credit.
The HSBC Gold Mastercard® credit card will allow you to avoid credit card interest for over a year. The introductory period on balance transfers is 18 months. You will have to pay a balance transfer fee of $10 or 4% (whichever is greater), which is slightly higher than the average balance transfer fee. But this fee may be worth it when you consider how long you’ll be paying no interest on the transferred balance. To top it all there is no penalty APR and you won’t be charged any penalty fee right away if you are late with a monthly payment. Similar to the other cards on this list, this card charges no annual fee.
This card will give you both, 0% intro APR on balance transfers and 0% intro APR on purchases with the introductory period of 15 months. The balance transfer fee is 3% of the amount transferred, which is not high, but not one of the lowest either. This fee may be offset by the introductory bonus (if you are able to grab it of course), but remember that balance transfers do not earn rewards. You will need to make sure you will be able to make purchases while paying off the transferred balance. When the introductory interest rates are over, ongoing APRs will apply. Since the card has no annual fee and allows to earn cash back on purchases, you may want to keep it.
Want to see how long it will take to pay off the transferred balance on these and some other cards?
Use our Balance Transfer Calculator to see which card will save you the most and will be the most reasonable option.
2. Request a balance transfer
There are two ways to initiate a balance transfer: when you apply for a balance transfer credit card or when you receive your new balance transfer credit card. The first option, requesting a balance transfer during credit card application process, is not offered by all issuers, but many balance transfer credit cards allow you to provide credit cards information to initiate a balance transfer. This is a bit risky because your balance transfer request may be rejected if you ask to transfer more than available credit limit on your new credit card.
The second option is not that risky. You already know the available credit limit on your new card and you can simply call the issuer or log in to your online account to initiate a balance transfer. To initiate any balance transfer, you will need to provide the following information: account number for the card from which you wish to transfer, the bank name, and the amount you would like to transfer.
You should remember that you will need to keep making all at least minimum monthly payments on your old credit card from which you’re transferring a balance. When the balance transfer is complete, your old credit card won’t be closed automatically, the account will remain active until you ask the issuer to close it.
3. Make sure the balance transfer is complete
As a final step of your balance transfer process, you will need to confirm the balance transfer is complete. Most balance transfers can take up to 14 days to complete. So, make sure you continue paying at least minimum monthly payments on all your active credit accounts. A single late payment will negatively impact your credit scores. Once you receive a statement confirming the balance transfer is complete, you can focus on paying off the new credit card, but don’t forget about your other active credit accounts. Continue making all monthly payments will all your creditors on time.