Best Balance Transfer Credit Cards
One of the primary reasons individuals get credit cards is for a ‘balance transfer’. A balance transfer is the process of transferring an existing balance on a current card (or cards) to a new credit card. There are two primary reasons for transferring a balance. Firstly, the new card may have a lower interest percentage which will save the cardholder money in the long-term. Secondly, the card may have an ‘interest free’ period which will result in no interest for an extended period of time. Thousands of Americans perform balance transfers every year in order to escape the clasps of high-interest credit card debt.
When cardholders get their first credit card they are often only able to sign up for cards with relatively high interest rates. This is because lenders see them as risky borrowers. On the other hand, this means that as a borrower you may rack up debt that then continues to expand because of interest rates that are much higher than normal. Transferring your current balance to another card can help alleviate the stress of accumulating interest. If you can be disciplined enough to take advantage of ‘interest free’ periods, this can be an extremely useful way to get out of debt.
This article will overview some of the things to look for in a good balance transfer credit card. In addition, it will outline some of the advantages and disadvantages of balance transfer credit cards.
America’s Growing Debt Problem
If you feel that you’ve gotten yourself into a position of having too much debt to pay off, you’re not alone. The United States has some of the highest personal debt rates in the world. A lot of this is a product of the financial crisis in 2007. Families were forced to take on extra household to debt to make their ends meet. Since 2007, wages in the United States have stagnated, which means that people haven’t been able to effectively pay off their debt. These interest rates have accumulated, causing massive liquidity problems for some Americans.
Balance transfer credit cards have provided a breath of fresh air for many American families. They’re one of the easiest ways to help get your financial profile back on track.
What to Look For
When deciding on the best balance transfer credit card there are three primary things to look for: APR (interest rate), ‘interest free’ period, and balance transfer fee.
- APR (Interest Rate) – This is one of the first things you should look at when deciding on a balance transfer card. Many people currently pay over 20% interest on their credit card balances. A good card to balance transfer to is one that has an interest rate in between 10-15%. You may also look to find a card that has a grace period on interest on new purchases. This way if you continue to use the card, you won’t rack up interest on your new purchases for a few months.
- ‘Interest Free’ Period – An ‘interest free’ period pertains to the balance that you have transferred from an old card. For example, you may currently have $10,000 in credit card debt on a credit account for which you pay 24% interest. If you transfer this to a card with an ‘interest free’ period, you may have a number of months where you pay no interest at all, and therefore may be able to pay off a sizeable chunk of your debt quickly. Good ‘interest free’ periods are normally anything between 12 and 18 months.
- Balance Transfer Fee – Most cards will charge you a one-time fee to transfer over your balance from another card. Good balance transfer cards will have a one-time fee between 1-3% — don’t accept anything higher.
- Other Fees – You should always be as aware as possible of additional fees that might be associated with your credit card. For example, some credit cards have fees for a variety of other reasons. If you decide to travel with your card a lot, make sure that there are minimal travel transaction costs. This can save you a lot of money in the long run.
You should also factor in annual fees. Plenty of reputable balance transfer cards in the U.S. don’t charge annual fees — it’s a good way to help pay off your debt quicker.
The primary advantages in balance transfer cards is the elimination of debt. It allows you to have breathing room that you may not have previously been afforded. Balance transfer cards also put you in a position to avoid debt in the long-term, as many of them have low interest rates. Some additional advantages are provided below.
- Long Term Credit Improvement – While applying for a new credit card damages your credit score in the short-term, it can help you improve your credit score in the long-term. This is because if you are able to pay off your debt or reduce you balance substantially, your credit score will largely benefit. It will also free you up to make better financial decisions in the future. If creditors see that you have made solid efforts to pay down your debt, this can also look good for you when applying for things such as a mortgage.
- Saving Money Elsewhere – If you manage to use a balance transfer credit card to pay down your debt successfully, you’ll find that you are open to having other costs in your life reduced. For example, some insurance companies will offer you better insurance premiums if you have a higher credit score.
The disadvantages of a balance transfer card come in two forms: credit score reduction and lack of benefits. In terms of credit score reduction, this isn’t always the case. But applying for new credit cards does impact your score, and if you have to apply for multiple, it can put a serious dent in your history for the near future. In terms of the lack of benefits – most balance transfer cards don’t offer rewards or points. This may not be an issue for you, but it means you don’t get any benefits from spending money on your card. Some additional disadvantages are outlined below.
- No Access to Cash – Getting cash on a balance transfer card won’t be easy to do. This type of withdrawal will not factor into your interest free period. If you do decide to withdraw cash on your credit card, you will be immediately charged a fee and high interest rate on the amount that you’ve withdrawn. If you’re finding you need access to cash to help satisfy other debts, then you’ll need to try and find another form of finance on top of your balance transfer credit card.
- Interest Free Period Runs Out – All good things come to an end, this is also true for the interest free period on your credit card. If you haven’t managed to pay off your debt by the time the interest free period is over, then you will begin accumulating debt again. Regardless, hopefully you have managed to pay off a significant portion of your debt, which will reduce your interest obligations moving forward.
The Revolving Credit Trap
Credit cards seem like a great way to get access to additional capital when you’re running low on cash. They’re typically easier to apply for than traditional loans, and they also manage to allow you to pay for things online and in person through an easy-to-use card facility. But because credit cards are unsecured debt, they have extremely high interest rates. This is why so may people get caught in the revolving credit trap. Unlike term loans, you can carry debt on your credit card for decades. Not having fixed payments often results in people neglecting to pay down their card balances. This can have catastrophic financial repercussions.
If you manage to escape this trap by using balance transfer card, you should try to begin approaching your credit card like a term loan – make fixed payments with the end goal of eliminating your debt completely. Try to stop spending on your credit card while it is in its interest-free period, otherwise you might not get anywhere.
Applying for a Balance Transfer Card
Applying for a balance transfer card has never been easier. You no longer have to walk into a bank and use paper applications. This speeds up the process immensely. You can apply for a credit card in about ten minutes online.
This has also helped secure customer data. Paper credit card applications leave your important personal information – such as your Social Security Number – open to being stolen by a staff member or someone else. Digital applications reduce the exposure your personal information has to fraud.
Make sure to check out some of the awesome links we have on our site – they can take you right to the application center for the best balance transfer credit cards currently available. We use a non-biased review process to find the most effective and affordable balance transfer cards on the market. You won’t have to worry about doing the leg work to find the right credit card – we’ve taken the pain out of the initial search process.
Preparing Your Credit Score
Even though applying for a balance transfer card is one of the best ways to improve your credit score in the long-run, you should still make an effort to improve your score prior to applying for one. This will make it easier for you to be approved for a card, and may also help you get a lower interest rate for when the interest-free period of the balance transfer card ends. Below are a couple tips on how to improve your score before your application.
- Reduce Debt As Much As Possible – One of the largest components of your credit score is the percentage of your revolving credit balances that are in use. If you are able to pay down your debt, it can help improve your credit score in about a month. Every time you are issued a new credit card balance, your creditors will update your information with credit reporting agencies. This is one of the quickest ways to improve your score.
- Check for Errors – A large portion of the American public have items on their credit card that can be removed. Don’t take your credit score for granted, make sure to check your report and see if there are any issues that you find to be either unfair or incorrect. You can submit forms to the credit reporting bodies to have these items removed. If you’re unsuccessful, a credit repair company might be able to help you out.
Transferring your balance through a balance transfer card can be overwhelmingly rewarding for those who currently have high amounts of debt. But those who do transfer their debt to a balance transfer card should be aware that they should take time to research which the best card on offer is prior to applying. Applying to multiple cards at once can negatively impact your credit score. You don’t want to end up with a bunch of inquiries on your credit report, this can increase your credit score and impact your interest rates.
When you do decide to apply for a balance transfer credit card, you should take the process seriously. Make sure you’re in a financial position to be able to commit to paying down your debt in the interest-free period. You don’t want to waste your time getting a new credit card if you won’t be able to make use of its advantages.
If you feel that a balance transfer card isn’t right for you, there are plenty of other credit cards on the market. Each have their own unique advantages to benefit from. We have a large database of information on all the cards available to you as an American resident. Check out some of our other suggested cards on our homepage – there is sure to be a card that matches your needs!
General Balance Transfer Credit Card Questions
This section answers general questions about balance transfer credit cards. Use this information to better understand more advanced answers later on.
What is a balance transfer credit card?
A balance transfer credit card is a credit card that you use to consolidate your existing credit card debt in one place so you can pay it off more quickly and cheaply.
How do credit card balance transfers work?
Balance transfers work by moving the balance from one card to another. If you have 3 cards with a $1,000 balance, then you could use a balance transfer card to zero-out the balance on each card.
When you transfer balance on credit cards what happens?
The balance moves from one account to another. The new account will have a lower or zero interest rate so more of your payment goes towards paying down your principal.
What does balance transfer mean on a credit card?
It means to reduce or eliminate the balance on one card by sending it to another credit card. The new card will have better terms that allows you to pay your debt down quickly.
What is a balance transfer from a credit card?
A balance transfer from a credit card is the balance that you send from one credit card to another. You would do this to lower your payments or take advantage of zero-interest offers on credit cards.
What is a no balance transfer fee credit card?
A no balance transfer fee credit card is designed to primarily be used for balance transfers. Most cards will charge you a certain percentage of a balance transfer to execute the transfer. A no balance transfer fee card doesn’t.
When should you transfer credit card balances?
You should transfer credit card balances when you have an opportunity to lower the effective interest rate you’re paying on that balance. This will lower the amount of money you spend overall to pay off your debt.
What does a 0-balance transfer credit card mean?
A 0-balance transfer credit card means there’s no fee and/or no interest rate for balance transfers that are executed in a certain period of time on the credit card.
What is the balance transfer fee on a credit card?
The balance transfer fee is how much the company charges you for a balance transfer. This is usually represented as a certain dollar amount or percentage of the transfer, whichever is higher.
Is credit card balance transfer a cash advance?
No, a credit card balance transfer isn’t a cash advance. A cash advance is when you get physical currency from your credit card account. A balance transfer moves your balance from one card to another.
Is a balance transfer fee a common credit card fee?
Yes, most credit cards have a balance transfer fee. You’ll only pay this fee if you transfer a balance from a previous credit card to that credit card.
Do balance transfer cards have a credit line?
Usually yes. Balance transfer cards have a credit line and can be used just like other credit cards to make purchases.
Balance Transfer Process
We’ll answer your questions about the process of credit card balance transfers in this section.
How long does it take to transfer credit card balance?
That depends on the way you initiated a balance transfer. For example, if you noted the balances you wanted to transfer on your application for a new card, then it could take up to 2 weeks for your account to reflect the transfer.
How to transfer credit card balance?
You can transfer a credit card balance as soon as you have another card to transfer the balance to. Once you have the new card, simply follow the instructions from your servicing bank to transfer your balance.
How to do a credit card balance transfer?
The best way to do a credit card balance transfer is to contact the company services the card you want to transfer a balance to. They’ll help you go through the steps of transferring a balance.
How long does a credit card balance transfer take?
To be safe you should give at least 21 days for balance transfers to be completed. This includes 7 days for application processing and 14 days for the actual transfer to complete.
How to transfer credit card balance to 0 interest?
You can transfer your credit card balance to a zero interest balance transfer card by sending the account information to your new credit card. They’ll be able to help you go through the steps you need to successfully transfer your balance.
How to apply for credit card balance transfer?
The best way to apply for a credit card balance transfer is to find a credit card that specializes in these kinds of transactions. Ensure that your new interest rate will be lower than your current rate, and fill out the application to apply.
How can I transfer my balance to another credit card?
You can transfer your balance to another card by providing the necessary information to your credit card’s servicing bank. They’ll help you set up and execute the balance transfer.
How long to transfer credit card balance?
Most experts recommend giving a balance transfer process at least 2 weeks from the time that you get approved for a balance transfer card.
Does credit card balance transfer work?
For many people, yes. A balance transfer credit card allows them to consolidate their debt in one place. The lower interest rates and introductory offers help them pay down their debt faster and cheaper.
Can a card user transfer their credit card balance?
If they have another card to receive the balance, then yes. You’ll need to provide the needed information to your credit card company and they’ll initiate the balance transfer.
How to pay credit card in full with balance transfer?
First you need to obtain a credit card that has a high enough limit and allows balance transfers. Then, you simply need to contact your credit card provider to set up the balance transfer.
Effects of Balance Transfer
This section answers your questions about the effects of credit card balance transfers.
Is it good to transfer credit card balances?
For many people, yes. As long as you can control your spending and pay down the balance on the card before interest rates spike up, you can pay your credit card debt of faster and for less money.
Does it look bad to transfer credit card balances?
That depends on how you’re managing your credit. There’s nothing wrong with using financial tools to lower your debt so long as you can keep your spending in control while using them.
Is transferring a credit card balance bad?
Not in most cases. The only way it could be bad is if you then start spending on the card you just transferred a balance from.
Is it wise to transfer credit card balances?
In many cases, yes. So long as you don’t use the balance transfer as a way to start spending on your original credit card, a balance transfer can help you pay off your credit card debt.
How does a credit card balance transfer affect credit score?
It depends on lots of complex factors. Generally, so long as you don’t spend again on your old card and do a good job of paying off your balance transfer, the balance transfer will raise your credit score by lowering the amount of credit you’re utilizing.
What is the benefit of transferring a credit card balance?
The benefit of transferring a credit card balance is that you can move your debt to a lower or zero interest rate. That means it’ll be cheaper and faster for you to pay off your balance.
What happens to old credit card after balance transfer?
The balance is reduced by the amount you transferred to your new credit card. The old credit card account will still be open and active, so it’s wise to avoid using it.
Is it worth it to transfer balances on credit cards?
It is for many people. You can use a balance transfer credit card to see if you’ll save enough for it to make sense for you.
Is transferring credit card balances a good idea?
In many cases, yes. It lets you lower your interest rates so your debt costs less to pay off. You can use a balance transfer calculator to see what your exact savings will be.
What happens when you transfer credit card balances?
The balance on the initial card goes down by the amount you transfer and the balance on the new card goes up by that amount. Both cards stay open and active. You’ll just be able to pay off the new card faster because the interest rate should be lower.
Does it make sense to transfer credit card balance?
It makes sense for many consumers that are looking for ways to get out of credit card debt. Transferring your balance can lower your interest rate and make it easier to pay your debt down. However, a qualified financial advisor will be able to give you better advice about your specific situation.
Does a balance transfer count as a credit card payment?
Yes, a balance transfer is just one large payment made to one credit card from another. This moves the balance to the new card.
Is transferring credit card balances bad for your credit?
Not usually. As long as you avoid spending money on your old card a balance transfer can improve your credit by lowering the amount of credit that you’re utilizing.
Is it smart to transfer balances on credit cards?
Sometimes it is, it depends on your situation. If you can get a lower interest rate that lets you pay your debt down faster, than it is smart to transfer credit card balances.
Do credit card balance transfers hurt your credit?
Not in most cases. Credit is a complex thing, so it’s impossible to say what will happen in your situation. However, most people that use a balance transfer see their credit score go up as they pay down their balance faster.
Does transferring a credit card balance close the account?
No. A credit card balance transfer is the same thing as a payment. That means your account won’t be closed when you do a balance transfer.
How do balance transfer cards work with credit history age?
A new balance transfer card will lower the average age of your credit accounts, but it doesn’t close the previous account, so you won’t lose the credit history that account creates.
Balance Transfer Rules and Restrictions
We’ll answer your questions about the rules and restrictions on credit card balance transfers in this section.
Can you transfer a balance from someone else's credit card?
In most cases, yes. However, the credit card company may have its own restrictions and policies in this situation, so you’ll want to check with them first.
How many times can you transfer credit card balances?
There’s no limit to the number of times you can transfer balances – a balance transfer is just a specialized form of payment.
Can you transfer a credit card balance to another credit card?
Yes, you can. You may face additional fees for the transfer, this will be noted in your credit card contract as a balance transfer fee.
Can you transfer store card balance to credit card?
Yes, you can. However, you’ll need to make sure that the amount you’re transferring falls within your balance transfer limits outlined in your credit card agreement.
Can you transfer part of a credit card balance?
Yes, a balance transfer works just like a payment. In the same way that you don’t need to pay the entirety of your balance at once, you also don’t need to transfer the whole balance at once.
Can I transfer an overdraft balance to a credit card?
In some cases. If your credit card and checking account are serviced by the same bank then they may have a program that sends overdraft transactions to your credit card.
Can you transfer PayPal credit balance to credit card?
Yes, just use your credit card to pay off your PayPal credit balance. Be careful though, as you may face a fee for using your credit card.
How many times can you transfer a credit card balance?
You can transfer a credit card balance as many times as you want. Just be careful as balance transfer fees will cause the balance to go up whenever you transfer a balance.
Can you transfer half a credit card balance?
Yes, you can. You can transfer however much of a balance you would like. Be sure that it will result in cheaper bills or faster debt payoff before you decide to transfer balances.
How many times can you balance transfer a credit card?
You can transfer balances on credit cards any number of times. A balance transfer works just like a payment, and there’s no limit to how frequently you can make payments on your card.
Can you balance transfer to an existing credit card?
You can, but you should be aware of any balance transfer fees that might happen if the card you’re transferring to is out of its introductory period.
Can you balance transfer 2 credit cards?
Yes, a balance transfer is just a fancy type of card payment. As long as you have a high enough limit, you can balance transfer as many credit cards as you want.
Can you transfer multiple credit card balances?
Yes, assuming that the balances you transfer are less than the balance transfer limit on the card you’re transferring them to.
Can you balance transfer student loans to a credit card?
Usually, but it rarely makes sense to do so. The interest rates on your credit card will likely be much higher than the ones you get from your student loan.
Is there a limit on credit card balance transfers?
There’s a dollar amount limit that’s set by your credit card. It may be the entirety of your credit limit or a large percentage of it.
Can I transfer negative balance credit card?
It depends on your particular credit card agreement. Your best option is to use the card with the negative balance to make a payment on the card with a positive balance.
How much can I balance transfer on credit card?
That depends on your specific credit card. Some cards have balance transfer limits that are less than the total credit limit on the card, while others allow you to transfer up to the total limit.
For the most part, yes. American Express is generally the only card that lets you place limits on what authorized users can and can’t do with the account.
Can credit card cosigner transfer balance?
Only if they’re also an authorized user. Being a cosigner just means you agree to be responsible for the debt if the primary cardholder defaults. It doesn’t automatically give you access to the account.
Specific Balance Transfer Credit Cards
This section answers questions about specific credit cards and balance transfers.
Which credit card has no balance transfer fee?
The Chase Slate, Amex EveryDay, Sun Trust Prime Rewards, Bank Americard for Students, Sierra Club Credit Card, and ReDirect Guide card all have no balance transfer fees.
Can you transfer Walmart credit card balance?
You can transfer the balance from your Walmart credit card to another credit card, but you can’t use your Walmart credit card to receive a balance transfer.
Can I transfer other credit card balance to PayPal credit?
Not in most cases. PayPal credit doesn’t facilitate balance transfers, unless you’re using a PayPal branded credit card from a major credit card provider.
Other Balance Transfer Questions
There are lots of questions about balance transfer credit cards. Many of them don’t fit into our other categories. You’ll find the answers to those questions here.
Should I transfer my credit card balance?
That depends on your specific financial situation. Many people find that transferring their credit card balance helps them pay it down faster while avoiding steep interest charges.
Can you balance transfer an overdraft to a credit card?
In some cases, yes. If your checking account and credit card go through the same bank, then some banks have a system that lets you transfer an overdraft to your charge card.
Can I use my credit card after a balance transfer?
You can, it will have a balance of zero so you’ll have the full credit limit available to you. However, this can cause huge debt problems and hurt your credit score, so it’s best avoided.
Can you transfer credit card balance to same company?
Usually, if one company has two different credit card products, then, assuming you have both of them, you can transfer the balance between different accounts.
Should I close my credit card after a balance transfer?
That depends on you. If you can avoid the temptation to spend on your old card, then it’s best to leave it open. However, if you don’t have the financial discipline required, then you may want to close it.
Do you get credit card points for balance transfers?
Not usually. Balance transfers are generally quite large and designed in a way to help you pay off debt faster. That means the credit card company usually doesn’t offer points for them.
Does a balance transfer close a credit card?
No, a balance transfer doesn’t close a credit card. Instead, it’s a single large payment that clears or mostly clears your credit card balance.
Are credit card balance transfer fees tax deductible?
Not in most cases. However, you’ll want to talk to a certified accountant or tax specialist to get an answer for your specific situation.
How do credit card companies make money on balance transfers?
There are two ways that credit card companies make money on balance transfers. The first is through balance transfer fees. They also make money if you don’t pay off the balance transfer during the zero-interest period and deferred interest kicks in.
Is a loan better than balance transfer credit card?
That depends on your situations and what offers you can get approved for. A certified financial advisor will be able to help you find the right product to help you get out of debt.
Do most credit cards allow balance transfer?
Many credit cards do allow balance transfers. The major exceptions are store credit cards and secured credit cards, as many of these cards are specialized and don’t allow you to transfer balances to them.
Do I leave credit cards open after transferring balance?
That depends on your situation. Many people find it better to leave the card open because it will help boost their credit score by lowering their credit utilization and increasing their average age of credit. However, if you’re going to spend on the card then it’s usually better to close it.
Does transferring balances earn you credit card points?
Not in most cases. The benefit of most balance transfers is that you save money on interest rates and can pay your debt down faster. Allowing points for balance transfers gives too much potential to game the system.
Financial Advisor - Best.CreditCard
Michelle is part of our expert team of financial advisors with a proven track record in the credit card industry. After graduating with an Economics Degree focusing on Personal Finance, she got involved with several credit and debt counseling startups.