If you need any help comparison shopping, read our frequently asked questions below:
What is a balance transfer credit card?
Balance transfer credit cards are credit cards that come with extremely low interest rate offers (sometimes as low as 0%) to entice people with credit card debt to transfer their balances from one card to another. These offers are usually only available for a limited period of time (e.g. 180 days, 10 months, 1 year, etc.) and are designed to bring in new customers who will hopefully keep the card even after the promotional period expires.
Why should I get a balance transfer credit card?
Balance transfer credit cards can be a great tool for paying down credit card debt on one card by transferring the balance to another card with a lower interest rate. If you plan on aggressively paying down your credit card debt during the low interest promotional period, a balance transfer credit card could potentially save you hundreds of dollars in interest, help you reduce your debt and boost your financial wellbeing.
What should I consider before getting a balance transfer credit card?
When used responsibly, a balance transfer credit card can save you money and help get you out of consumer debt sooner. Before transferring your debt from one card to another, though, you should consider the applicable balance transfer fees, interest rates for new purchases on the card and the standard interest rate when the promotional period ends.
Credit card issuers usually charge a balance transfer fee, which can range from 1.00-5.00% of the amount you transfer over (e.g. if you are transferring a balance of $10,000 and the transfer fee is 3%, you’ll be charged $300 for the switch). Depending on the interest rate being offered with the new card, the balance transfer fee may not be worth the move.
Interest rates can also end up costing you more in the long run, if you haven’t paid off your debt by the end of the promotional period, or if you’ve missed any payments when the promotional period ends and the standard interest rate applies.
A final factor to consider is that if you use your balance transfer credit card for new purchases before you pay off the original amount you transferred over, you’ll be charged the standard interest rate (which is often 19.99% or more) and any payments you make will be applied to the balance transfer amount first; that means you’ll continue to accrue interest on any purchases you make on the card, after conducting the balance transfer, until the amount you originally transferred is 100% paid off.
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