Our Objective Rating of the Best Cards for Transferring a Balance
We've spent thousands of hours analyzing the credit card market in order to identify the best credit cards for balance transfers. Balance transfer cards can allow you to move an accumulated balance from one or more high-rate credit cards to one with a balance transfer offer, potentially saving you hundreds or even thousands of dollars in interest charges. We focus on highlighting the best cards possible and do not give any preference to cards from which we may receive compensation. These are the cards we'd recommend to our family and friends, and they're the same ones we're recommending to you.
Important: The novel coronavirus pandemic and its impact to the global economy has caused particular upheaval in the balance transfer cards market. Some issuers have either eliminated cards that previously would have been our winners or have temporarily stopped accepting applications on cards that we assessed to be strong options. We'll continue to update our list of the best balance transfer cards as circumstances change, and the following winners are still available.
Best Balance Transfer Credit Cards for December 2020
BEST OVERALL, BEST FOR LONG 0% INTRODUCTORY APR PERIOD
Citi Simplicity®
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Rating As A Balance Transfer Card - 4.8
FULL REVIEW https://www.investopedia.com/citi-simplicity-credit-card-review-4795818
APPLY NOW https://www.citi.com/credit-cards/credit-card-details/citi.action?ID=citi-simplicity-credit-card
On Citi's Website
RECOMMENDED CREDIT SCORE 670 Good - 850 Excellent
REGULAR APR (%) 14.74% - 24.74% variable
ANNUAL FEE - $0
INTRO BALANCE TRANSFER APR - 0% for 18 Months
INTRO PURCHASE APR - 0% for 18 Months
BALANCE TRANSFER FEE - Either $5 or 3% of the amount of each transfer, whichever is greater.
REWARDS EARNING RATE - This card does not offer a rewards program.
WHY WE CHOSE THIS CARD
We chose Citi Simplicity as our top choice for balance transfer credit cards because it offers one of the longest 0% introductory APR periods for balance transfers (18 months) in the market. It also lives up to its name in most other respects, having no annual fee, late fees, or penalty rates. Citi recently lowered its balance transfer fee on Simplicity from 5% to 3%, which is more in line with industry standards and is a welcome development during this time of financial uncertainty.
PROS & CONS
Pros
HIGHLIGHTS
BEST FOR BUSINESS
U.S. Bank Business Platinum Card
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Rating As A Balance Transfer Card - 3.9
FULL REVIEW https://www.investopedia.com/us-bank-business-platinum-card-review-4801588
APPLY NOW https://bizcards.usbank.com/credit/business-edge-platinum.do
On U.S. Bank's Website
RECOMMENDED CREDIT SCORE 800 850 Excellent
REGULAR APR (%) - 9.99% - 17.99% variable
ANNUAL FEE - $0
REWARDS EARNING RATE - This card does not offer a rewards program.
INTRO PURCHASE APR - 0% for 15 Billing Cycles
INTRO BALANCE TRANSFER APR - 0% for 15 Billing Cycles
BALANCE TRANSFER FEE - Either 3% of the amount of each transfer or $5 minimum, whichever is greater.
CASH ADVANCE APR (%) - 23.99%
CASH ADVANCE FEE - Either $10 or 5% of the amount of each cash advance, whichever is greater.
WHY WE CHOSE THIS CARD
The U.S. Bank Business Platinum Card is our pick for best balance transfer option for small business due to its exceptionally generous 15 month 0% APR period for transfers made in the first 30 days of account opening. Balance transfer offers are relatively uncommon for business credit cards and this card should be an excellent choice for business owners who need to pay down debt over time. There is a standard balance transfer fee of 3% but has no annual membership fee.
PROS & CONS
Pros
HIGHLIGHTS
BEST FOR LONG LOW-INTEREST INTRODUCTORY APR PERIOD
SunTrust Prime Rewards Credit Card
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Rating As A Balance Transfer Card - 3.5
FULL REVIEW https://www.investopedia.com/suntrust-prime-rewards-credit-card-review-4798531
APPLY NOW https://www.suntrust.com/credit-cards
On SunTrust's Website
CURRENT OFFER
3 year introductory offer on eligible balance transfers at Prime Rate (currently 3.25% variable APR). Plus earn a $100 in statement credit after you spend $500 on qualifying purchases in the first 3 months after account opening.
RECOMMENDED CREDIT SCORE Good 670 - Excellent 850
REGULAR APR (%)11.24% - 21.24% variable
ANNUAL FEE - $0
INTRO BALANCE TRANSFER APR - Prime Rate (3.25%) for 36 Months
BALANCE TRANSFER FEE - Either $10 or 3% of the amount of each transfer, whichever is greater.
REWARDS EARNING RATE - 1% cash back on all eligible purchases.
WHY WE CHOSE THIS CARD
The SunTrust Prime Rewards offers an extremely long 36-month introductory balance transfer APR for transfers made in the first 60 days of account opening, by far the longest in the category. The only caveat is that the introductory APR is not 0% but rather the Prime Rate, which is currently 3.25%. Over the long run, paying the prime rate for three years with this card may actually be less expensive than what many balance-transfer cards offer: no interest for a year or so, followed by a long-term APR that’s far above the Prime Rate. This offer, then, is ideal for someone who needs multiple years at a very low interest to pay down a large balance. The SunTrust Prime Rewards also waives transfer fees on balances moved in the first 60 days of account opening, making it an even better value.
PROS & CONS
Pros
HIGHLIGHTS
What Is a Balance Transfer?
A balance transfer entails moving existing debt balances, typically from another credit card, to a new credit card account that typically offers a special promotional interest rate. That rate is most often 0% APR and may be offered for a range of time, typically between 15 and 21 months, giving those who are carrying debt on a high-interest card an extended period to pay down a balance without incurring interest.
Important: In the current economic environment credit card issuers may be more conservative in terms of approving balance transfer credit card applications and subsequent transfer requests.
How Do Balance Transfers Work?
Balance transfers are usually initiated soon after a new credit card account that provides balance transfers at no or low interest is opened. One potential complication to such timing is that, until the new account is approved, its credit line is not known, and so the amount you’ll be allowed to transfer cannot be determined. So you could, for example, seek a balance-transfer card with the hope of moving, say, $10,000 of existing card debt to it, but yet qualify for only a $5,000 credit line on your new account. That could leave you stuck with continuing to pay high interest on half of the debt, or scrambling to seek alternative low-cost financing for it.
Balance transfers are often subject to a transfer fee (usually of 3% of the balance being transferred). This fee may be waived as part of an initial promotional period, though this is a relatively rare occurrence, since card issuers often rely on the fee in order to generate income from balance-transfer offers.
How Long Does a Balance Transfer Take?
Balance transfers generally take about a week (5 to 7 business days) to complete but it can take 4 - 6 weeks for some issuers to move a balance from another issuer to your account. It’s best to initiate a balance transfer when you get a new card that offers a 0% APR balance transfer introductory period, as transfers to new accounts can take longer compared to existing accounts. It can be a good idea to periodically contact your new card issuer to determine the status of any transfers that have been initiated and to continue to make at least the minimum payment due on the original balance in order to avoid any late payment fees or interest.
Who Is Best Suited to a Balance-Transfer Credit Card?
The ideal candidate for a balance-transfer card is someone carrying high-interest debt on another credit card who has the ability and discipline to pay off any transferred balance before the period of low introductory APR expires. Those personal attributes allow the cardholder to take advantage of the offer’s low-interest period without having its savings offset by the cost of carrying a balance at high interest after the offer is over.
Also optimal is that balance-transfer cardholders have good or excellent credit. In particular, they should not have a history of late payments, be currently overdue on their bills, or have exceeded credit limits in the past.
Who is Unsuited to a Balance-Transfer Credit Card?
Balance-transfer cards are not for those who are unwilling or unable to focus all their available financial resources on paying down a transferred balance. If you can’t afford, or lack the discipline, to eliminate most or all non-essential spending for at least a year, transferring a balance to another credit card may not be for you.
That’s because, even with a 0% APR offer in effect, continuing to increase the balance you owe on a credit card typically serves only to compound your financial problems. It’s best, then, to refrain from any and all discretionary card spending until your transferred balance is eliminated.
Transfers are also to be avoided by those seeking not to solve their debt problems but to get a temporary reprieve from them. Even the longest 0% APR transfer period will eventually end, and the regular APR you’ll then pay on a remaining balance will probably be similar to that of the card from which you transferred the funds in the first place. You will only have kicked your financial challenges down the road, rather than squarely addressing them.
Be wary of a balance-transfer card, too, if you can’t qualify to receive 0% APR, or another low rate, on the transfer, or can’t be approved for a credit line sufficient to cover the amount you need. The size of both credit lines and transfer rates are subject to your credit quality. If your credit record is wanting, you may not get a big-enough credit line or a low-enough interest rate to justify moving the balance, especially if a transfer fee is involved.
How Much Money Can be Saved with a Balance-Transfer Card?
The potential savings from getting a balance-transfer card varies depending on multiple factors. Those include the amount you transfer, the APR you’re currently paying, the new promotional APR, the promotional period, and any transfer fee involved.
Still, the savings can be substantial, as this example illustrates:
Current Card
Existing balance $5,000
APR 18.9%
Principal and interest payments over 12 months if debt paid off $5,527
Potential Balance Transfer
Balance transfer amount $5,000
Promotional APR (for 12 months) 0%
Transfer fee (3% X $5,000) $150
Principal and interest payments over 12 months if debt paid off $5,000
Total cost, including $150 transfer fee $5,150
In this example, the cost of keeping the balance on the current card would be $5,527 and the cost with the balance transfer card would be $5,150 - resulting in a savings of $377 over 12 months if you switched to the balance transfer card.
Do Balance Transfers Affect Credit Scores?
As with opening any other new credit card account, getting a new balance-transfer credit card can temporarily cause a dip in credit score, if only a small one. Your score may also receive a further hit if, after the transfer is complete, you close an older account from which the balance was transferred. Such a closing can potentially lower the total average age of credit in your name, and a longer average helps contribute to a higher score.
Another factor that can affect credit score is if you use up all or even most of the credit line for the balance-transfer card. Since card issuers prefer customers who live well within their means, the lower your “credit-line utilization,” the better, at least as far as your credit score goes.
How Can Someone Find a Good Balance-Transfer Card?
By and large, the best balance-transfer card is the one that has the longest 0% APR period, the lowest transfer fee, and the lowest long-term APR after the “free interest” period expires. Other factors to consider include whether new purchases are also eligible for 0% APR, and if the card offers any other features.
Follow these steps to finding the best balance-transfer option:
Understand your creditworthiness
Also known as determining your credit score, this gives you the best idea of how big a credit line a balance-transfer card may afford you, and whether you’ll indeed receive the low or no APR its introductory offer promises.
You can access free pre-qualification tools to get an estimate of your actual credit score, and what cards that score might qualify you to receive. Doing this homework in advance can help preserve your credit score by not triggering a credit inquiry for a card you may be denied, or that you may not accept because its terms are undesirable. And applying for a new card can negatively affect your credit, since every credit-bureau inquiry can reduce your score at least a little.
Choose the combination of 0% APR period and ongoing interest rate that best suits you
Balance-transfer cards often adjust the length of the introductory 0% APR offer in concert with the interest rate you will pay after that period is over. Shorter introductory periods are sometimes accompanied by a more favorable ongoing APR, and vice versa. Select a combination of the two that works for your needs. For example, if you plan to pay off a balance in full by the end of the 0% APR period, seek a card that makes that time as long as possible, even if the APR you’ll pay after that period is on the high side.
Conversely, if you know you’ll need more time to pay off your debt than 0% APR offers provide, run the math on the total interest you’ll pay with various cards. You may find you’re better off with a fairly short 0% APR offer and a low ongoing APR than a long interest-free period, followed by paying the market rate for the subsequent months or even years.
Factor in any transfer fee
Balance-transfer cards can also trade off the presence and size of any transfer fee with the card’s other attributes. When comparing cards, then, be sure to include the impact of a fee as you run the math.
Consider any rewards the card offers
Some balance-transfer cards are essentially purpose-built for paying down debt, and so may offer few or no of the rewards that are commonplace on cards of other types. Still, others do offer cash-back rewards. If you’re considering any of these, be sure to include expected rewards earnings in your financial comparisons with other cards. (Keep in mind, however, that actual balance transfers rarely earn rewards.)
Weigh any other features
Likewise, the dedication of balance-transfer cards to paying down debt may leave little room for them to, say, offer car-rental insurance or free roadside assistance. Nonetheless, there are exceptions, and such niceties as these warrant consideration as you weigh the various cards. That’s especially the case if the features offered are lacking on other cards you have in your wallet.
What’s Involved in Performing a Balance Transfer?
To take advantage of 0% APR offers, balance transfers usually must be initiated at the time of account approval, or within a few months of that date. At that point, you can initiate a transfer simply by entering the amount you wish to transfer and the account number of the card from which you wish to move the funds into an application associated with the balance-transfer card.Transfers can be initiated at a later date as well by calling or requesting online through your new account’s issuer website although, as noted, the promotional 0% APR offer may no longer be in effect. However, card issuers often mail or email subsequent balance transfer promotional offers to their existing customers.
Methodology
Balance Transfer Credit Card Rating: Category Weightings
Information Gathering
In order to track and assess the U.S. domestic credit card market, we gather scores of data points on more than 300 cards. This data is collected manually from both card-issuer websites and publicly available sources.
To ensure our information is as up-to-date as possible, we deploy automated tools that monitor changes in such key data as annual percentage rates, introductory rates, introductory periods, bonus offers, rewards earnings rates, fees and card benefits. We then rapidly make any needed updates to our card listings, reviews, and recommendations to ensure that readers have the most reliable information and advice.
Initial Scoring
Once we collect credit card data we organize it in our database according to features, which roll up into feature sets (such as rewards, interest, fees, benefits and Security/Customer Service). Each individual card feature is assigned a star rating score on a 1 to 5 scale using a formula. For instance, for a one-time bonus score we would use a formula like (if bonus is $500 or greater, then assign a score of 5; if $300-$499 then 4, and so forth). Weighting of scores. Once all of each card’s features have received a score we apply a weighting factor to each feature to arrive at a weighted average score for each card (according to the general category in which it resides, such as travel rewards).
This weighting process allows us to assign significantly more emphasis to the attributes important to a particular category, and downplay those that are less relevant to it. That allows us to objectively identify cards that stand out in their category, and why they do. For example, we apply significantly higher weight to such travel-specific features as airport lounge access or primary rental car insurance than we do to attributes such as interest rates or fees that might be more strongly considered for other categories, such as balance-transfer cards.
Earnings rates
Another critical factor we consider when rating and ranking travel cards and other types of rewards cards are the cards’ effective earnings rates. We first calculate the average value of points or miles for all the rewards cards in our database, a painstaking process that entails collecting all airline fare data by carrier across scores of popular domestic and international city-pairs along with per-night hotel charges at all major hotel brands.
The required points and miles for air travel or hotel stays from the various reward programs is then used to calculate an effective earnings rate for each card. That allows our readers to make the most informed choices. By putting a card’s large one-time bonus or earnings rates into context across many dimensions and card features, they can more readily weigh the card’s benefits relative to its costs. Uncovering the true but often opaque redemption value of rewards points or miles is, we feel, the only reliable way to make cogent choices among competing value-based cards.
Card Features We Score
As mentioned in our methodology explanation, we place significant weight on certain travel-related features in determining our ratings for each card. Specifically, we place over 50% of our overall assessment score on the combination of the following factors:
Another consideration are the cards’ coverage, if any, in these travel-related areas:
General, non-travel related features that we consider and score include:
How We Reach Our Final Assessments
We rely mostly on the objective scores created by our rating algorithms to determine which card is chosen as the best travel rewards credit card, as well as the ones deemed best for one-time bonuses and as co-branded airline and hotel choices.
However, we may make some adjustments from time to time, to both features and weightings that could affect rankings, which can be influenced by subjective input from our credit card experts. Any potential modifications will be consistent with Investopedia’s belief that consumers are best served by travel cards that:
(c) https://www.investopedia.com/best-balance-transfer-credit-cards-4801444
We've spent thousands of hours analyzing the credit card market in order to identify the best credit cards for balance transfers. Balance transfer cards can allow you to move an accumulated balance from one or more high-rate credit cards to one with a balance transfer offer, potentially saving you hundreds or even thousands of dollars in interest charges. We focus on highlighting the best cards possible and do not give any preference to cards from which we may receive compensation. These are the cards we'd recommend to our family and friends, and they're the same ones we're recommending to you.
Important: The novel coronavirus pandemic and its impact to the global economy has caused particular upheaval in the balance transfer cards market. Some issuers have either eliminated cards that previously would have been our winners or have temporarily stopped accepting applications on cards that we assessed to be strong options. We'll continue to update our list of the best balance transfer cards as circumstances change, and the following winners are still available.
Best Balance Transfer Credit Cards for December 2020
- Citi Simplicity: Best Overall, Best for Long 0% Introductory APR Period
- U.S. Bank Business Platinum: Best for Business
- SunTrust Prime Rewards: Best for Long Low-interest Introductory APR Period
BEST OVERALL, BEST FOR LONG 0% INTRODUCTORY APR PERIOD
Citi Simplicity®
Rating As A Balance Transfer Card - 4.8
FULL REVIEW https://www.investopedia.com/citi-simplicity-credit-card-review-4795818
APPLY NOW https://www.citi.com/credit-cards/credit-card-details/citi.action?ID=citi-simplicity-credit-card
On Citi's Website
RECOMMENDED CREDIT SCORE 670 Good - 850 Excellent
REGULAR APR (%) 14.74% - 24.74% variable
ANNUAL FEE - $0
INTRO BALANCE TRANSFER APR - 0% for 18 Months
INTRO PURCHASE APR - 0% for 18 Months
BALANCE TRANSFER FEE - Either $5 or 3% of the amount of each transfer, whichever is greater.
REWARDS EARNING RATE - This card does not offer a rewards program.
WHY WE CHOSE THIS CARD
We chose Citi Simplicity as our top choice for balance transfer credit cards because it offers one of the longest 0% introductory APR periods for balance transfers (18 months) in the market. It also lives up to its name in most other respects, having no annual fee, late fees, or penalty rates. Citi recently lowered its balance transfer fee on Simplicity from 5% to 3%, which is more in line with industry standards and is a welcome development during this time of financial uncertainty.
PROS & CONS
Pros
- Outstanding 0% APR offer for 18 months from account opening on balance transfers
- 0% introductory APR offer on new purchases for 18 months from account opening
- No late fees, penalty rates, or annual fees
- High balance-transfer fee
- 3% foreign transaction fee
- No rewards program or one-time bonus offer
HIGHLIGHTS
- No late fees.
- No penalty rate.
- No annual fee.
- Plus, get a low intro APR for 18 months on balance transfers and purchases.
BEST FOR BUSINESS
U.S. Bank Business Platinum Card
Rating As A Balance Transfer Card - 3.9
FULL REVIEW https://www.investopedia.com/us-bank-business-platinum-card-review-4801588
APPLY NOW https://bizcards.usbank.com/credit/business-edge-platinum.do
On U.S. Bank's Website
RECOMMENDED CREDIT SCORE 800 850 Excellent
REGULAR APR (%) - 9.99% - 17.99% variable
ANNUAL FEE - $0
REWARDS EARNING RATE - This card does not offer a rewards program.
INTRO PURCHASE APR - 0% for 15 Billing Cycles
INTRO BALANCE TRANSFER APR - 0% for 15 Billing Cycles
BALANCE TRANSFER FEE - Either 3% of the amount of each transfer or $5 minimum, whichever is greater.
CASH ADVANCE APR (%) - 23.99%
CASH ADVANCE FEE - Either $10 or 5% of the amount of each cash advance, whichever is greater.
WHY WE CHOSE THIS CARD
The U.S. Bank Business Platinum Card is our pick for best balance transfer option for small business due to its exceptionally generous 15 month 0% APR period for transfers made in the first 30 days of account opening. Balance transfer offers are relatively uncommon for business credit cards and this card should be an excellent choice for business owners who need to pay down debt over time. There is a standard balance transfer fee of 3% but has no annual membership fee.
PROS & CONS
Pros
- Generous 0% APR offer, plus low ongoing APR
- No annual fee
- No rewards or bonus
- Minimal benefits
- U.S. Bank's small business credit card customer service is below par
HIGHLIGHTS
- 0% Introductory APR for 15 billing cycles on purchaes and balance transfers.
- No annual fee.
- 24/7 dedicated service, provided by business specialists, when you need it.
- Free online tool that provides instant access to reporting that is designed to give you a clearer picture of your business credit card spending.
BEST FOR LONG LOW-INTEREST INTRODUCTORY APR PERIOD
SunTrust Prime Rewards Credit Card
Rating As A Balance Transfer Card - 3.5
FULL REVIEW https://www.investopedia.com/suntrust-prime-rewards-credit-card-review-4798531
APPLY NOW https://www.suntrust.com/credit-cards
On SunTrust's Website
CURRENT OFFER
3 year introductory offer on eligible balance transfers at Prime Rate (currently 3.25% variable APR). Plus earn a $100 in statement credit after you spend $500 on qualifying purchases in the first 3 months after account opening.
RECOMMENDED CREDIT SCORE Good 670 - Excellent 850
REGULAR APR (%)11.24% - 21.24% variable
ANNUAL FEE - $0
INTRO BALANCE TRANSFER APR - Prime Rate (3.25%) for 36 Months
BALANCE TRANSFER FEE - Either $10 or 3% of the amount of each transfer, whichever is greater.
REWARDS EARNING RATE - 1% cash back on all eligible purchases.
WHY WE CHOSE THIS CARD
The SunTrust Prime Rewards offers an extremely long 36-month introductory balance transfer APR for transfers made in the first 60 days of account opening, by far the longest in the category. The only caveat is that the introductory APR is not 0% but rather the Prime Rate, which is currently 3.25%. Over the long run, paying the prime rate for three years with this card may actually be less expensive than what many balance-transfer cards offer: no interest for a year or so, followed by a long-term APR that’s far above the Prime Rate. This offer, then, is ideal for someone who needs multiple years at a very low interest to pay down a large balance. The SunTrust Prime Rewards also waives transfer fees on balances moved in the first 60 days of account opening, making it an even better value.
PROS & CONS
Pros
- No annual fee
- Prime Rate (currently 3.25%) APR on balance transfers for 36 months
- No fee on balance transfers made within 60 days of account opening
- No 0% APR
- No one-time bonus
- Charges foreign transaction fees
- Only available online in AK, AR, DC, FL, GA, MD, MS, NC, SC, TN, VA, and WV.
HIGHLIGHTS
- $100 statement credit after you spend $500 on qualifying purchases in the first 3 months after account opening.
- 1% unlimited cash back on all qualifying purchases.
- 3 year introductory offer at Prime Rate (currently 3.25% variable APR) on balance transfers made in the first 60 days after account opening.
- Pay no balance transfer fee when you transfer a balance during the first 60 days your account is open. After the first 60 days of account opening, the fee for future balance transfers is $10 or 3% of the amount of the transfer, whichever is greater.
What Is a Balance Transfer?
A balance transfer entails moving existing debt balances, typically from another credit card, to a new credit card account that typically offers a special promotional interest rate. That rate is most often 0% APR and may be offered for a range of time, typically between 15 and 21 months, giving those who are carrying debt on a high-interest card an extended period to pay down a balance without incurring interest.
Important: In the current economic environment credit card issuers may be more conservative in terms of approving balance transfer credit card applications and subsequent transfer requests.
How Do Balance Transfers Work?
Balance transfers are usually initiated soon after a new credit card account that provides balance transfers at no or low interest is opened. One potential complication to such timing is that, until the new account is approved, its credit line is not known, and so the amount you’ll be allowed to transfer cannot be determined. So you could, for example, seek a balance-transfer card with the hope of moving, say, $10,000 of existing card debt to it, but yet qualify for only a $5,000 credit line on your new account. That could leave you stuck with continuing to pay high interest on half of the debt, or scrambling to seek alternative low-cost financing for it.
Balance transfers are often subject to a transfer fee (usually of 3% of the balance being transferred). This fee may be waived as part of an initial promotional period, though this is a relatively rare occurrence, since card issuers often rely on the fee in order to generate income from balance-transfer offers.
How Long Does a Balance Transfer Take?
Balance transfers generally take about a week (5 to 7 business days) to complete but it can take 4 - 6 weeks for some issuers to move a balance from another issuer to your account. It’s best to initiate a balance transfer when you get a new card that offers a 0% APR balance transfer introductory period, as transfers to new accounts can take longer compared to existing accounts. It can be a good idea to periodically contact your new card issuer to determine the status of any transfers that have been initiated and to continue to make at least the minimum payment due on the original balance in order to avoid any late payment fees or interest.
Who Is Best Suited to a Balance-Transfer Credit Card?
The ideal candidate for a balance-transfer card is someone carrying high-interest debt on another credit card who has the ability and discipline to pay off any transferred balance before the period of low introductory APR expires. Those personal attributes allow the cardholder to take advantage of the offer’s low-interest period without having its savings offset by the cost of carrying a balance at high interest after the offer is over.
Also optimal is that balance-transfer cardholders have good or excellent credit. In particular, they should not have a history of late payments, be currently overdue on their bills, or have exceeded credit limits in the past.
Who is Unsuited to a Balance-Transfer Credit Card?
Balance-transfer cards are not for those who are unwilling or unable to focus all their available financial resources on paying down a transferred balance. If you can’t afford, or lack the discipline, to eliminate most or all non-essential spending for at least a year, transferring a balance to another credit card may not be for you.
That’s because, even with a 0% APR offer in effect, continuing to increase the balance you owe on a credit card typically serves only to compound your financial problems. It’s best, then, to refrain from any and all discretionary card spending until your transferred balance is eliminated.
Transfers are also to be avoided by those seeking not to solve their debt problems but to get a temporary reprieve from them. Even the longest 0% APR transfer period will eventually end, and the regular APR you’ll then pay on a remaining balance will probably be similar to that of the card from which you transferred the funds in the first place. You will only have kicked your financial challenges down the road, rather than squarely addressing them.
Be wary of a balance-transfer card, too, if you can’t qualify to receive 0% APR, or another low rate, on the transfer, or can’t be approved for a credit line sufficient to cover the amount you need. The size of both credit lines and transfer rates are subject to your credit quality. If your credit record is wanting, you may not get a big-enough credit line or a low-enough interest rate to justify moving the balance, especially if a transfer fee is involved.
How Much Money Can be Saved with a Balance-Transfer Card?
The potential savings from getting a balance-transfer card varies depending on multiple factors. Those include the amount you transfer, the APR you’re currently paying, the new promotional APR, the promotional period, and any transfer fee involved.
Still, the savings can be substantial, as this example illustrates:
Current Card
Existing balance $5,000
APR 18.9%
Principal and interest payments over 12 months if debt paid off $5,527
Potential Balance Transfer
Balance transfer amount $5,000
Promotional APR (for 12 months) 0%
Transfer fee (3% X $5,000) $150
Principal and interest payments over 12 months if debt paid off $5,000
Total cost, including $150 transfer fee $5,150
In this example, the cost of keeping the balance on the current card would be $5,527 and the cost with the balance transfer card would be $5,150 - resulting in a savings of $377 over 12 months if you switched to the balance transfer card.
Do Balance Transfers Affect Credit Scores?
As with opening any other new credit card account, getting a new balance-transfer credit card can temporarily cause a dip in credit score, if only a small one. Your score may also receive a further hit if, after the transfer is complete, you close an older account from which the balance was transferred. Such a closing can potentially lower the total average age of credit in your name, and a longer average helps contribute to a higher score.
Another factor that can affect credit score is if you use up all or even most of the credit line for the balance-transfer card. Since card issuers prefer customers who live well within their means, the lower your “credit-line utilization,” the better, at least as far as your credit score goes.
How Can Someone Find a Good Balance-Transfer Card?
By and large, the best balance-transfer card is the one that has the longest 0% APR period, the lowest transfer fee, and the lowest long-term APR after the “free interest” period expires. Other factors to consider include whether new purchases are also eligible for 0% APR, and if the card offers any other features.
Follow these steps to finding the best balance-transfer option:
Understand your creditworthiness
Also known as determining your credit score, this gives you the best idea of how big a credit line a balance-transfer card may afford you, and whether you’ll indeed receive the low or no APR its introductory offer promises.
You can access free pre-qualification tools to get an estimate of your actual credit score, and what cards that score might qualify you to receive. Doing this homework in advance can help preserve your credit score by not triggering a credit inquiry for a card you may be denied, or that you may not accept because its terms are undesirable. And applying for a new card can negatively affect your credit, since every credit-bureau inquiry can reduce your score at least a little.
Choose the combination of 0% APR period and ongoing interest rate that best suits you
Balance-transfer cards often adjust the length of the introductory 0% APR offer in concert with the interest rate you will pay after that period is over. Shorter introductory periods are sometimes accompanied by a more favorable ongoing APR, and vice versa. Select a combination of the two that works for your needs. For example, if you plan to pay off a balance in full by the end of the 0% APR period, seek a card that makes that time as long as possible, even if the APR you’ll pay after that period is on the high side.
Conversely, if you know you’ll need more time to pay off your debt than 0% APR offers provide, run the math on the total interest you’ll pay with various cards. You may find you’re better off with a fairly short 0% APR offer and a low ongoing APR than a long interest-free period, followed by paying the market rate for the subsequent months or even years.
Factor in any transfer fee
Balance-transfer cards can also trade off the presence and size of any transfer fee with the card’s other attributes. When comparing cards, then, be sure to include the impact of a fee as you run the math.
Consider any rewards the card offers
Some balance-transfer cards are essentially purpose-built for paying down debt, and so may offer few or no of the rewards that are commonplace on cards of other types. Still, others do offer cash-back rewards. If you’re considering any of these, be sure to include expected rewards earnings in your financial comparisons with other cards. (Keep in mind, however, that actual balance transfers rarely earn rewards.)
Weigh any other features
Likewise, the dedication of balance-transfer cards to paying down debt may leave little room for them to, say, offer car-rental insurance or free roadside assistance. Nonetheless, there are exceptions, and such niceties as these warrant consideration as you weigh the various cards. That’s especially the case if the features offered are lacking on other cards you have in your wallet.
What’s Involved in Performing a Balance Transfer?
To take advantage of 0% APR offers, balance transfers usually must be initiated at the time of account approval, or within a few months of that date. At that point, you can initiate a transfer simply by entering the amount you wish to transfer and the account number of the card from which you wish to move the funds into an application associated with the balance-transfer card.Transfers can be initiated at a later date as well by calling or requesting online through your new account’s issuer website although, as noted, the promotional 0% APR offer may no longer be in effect. However, card issuers often mail or email subsequent balance transfer promotional offers to their existing customers.
Methodology
Balance Transfer Credit Card Rating: Category Weightings
Information Gathering
In order to track and assess the U.S. domestic credit card market, we gather scores of data points on more than 300 cards. This data is collected manually from both card-issuer websites and publicly available sources.
To ensure our information is as up-to-date as possible, we deploy automated tools that monitor changes in such key data as annual percentage rates, introductory rates, introductory periods, bonus offers, rewards earnings rates, fees and card benefits. We then rapidly make any needed updates to our card listings, reviews, and recommendations to ensure that readers have the most reliable information and advice.
Initial Scoring
Once we collect credit card data we organize it in our database according to features, which roll up into feature sets (such as rewards, interest, fees, benefits and Security/Customer Service). Each individual card feature is assigned a star rating score on a 1 to 5 scale using a formula. For instance, for a one-time bonus score we would use a formula like (if bonus is $500 or greater, then assign a score of 5; if $300-$499 then 4, and so forth). Weighting of scores. Once all of each card’s features have received a score we apply a weighting factor to each feature to arrive at a weighted average score for each card (according to the general category in which it resides, such as travel rewards).
This weighting process allows us to assign significantly more emphasis to the attributes important to a particular category, and downplay those that are less relevant to it. That allows us to objectively identify cards that stand out in their category, and why they do. For example, we apply significantly higher weight to such travel-specific features as airport lounge access or primary rental car insurance than we do to attributes such as interest rates or fees that might be more strongly considered for other categories, such as balance-transfer cards.
Earnings rates
Another critical factor we consider when rating and ranking travel cards and other types of rewards cards are the cards’ effective earnings rates. We first calculate the average value of points or miles for all the rewards cards in our database, a painstaking process that entails collecting all airline fare data by carrier across scores of popular domestic and international city-pairs along with per-night hotel charges at all major hotel brands.
The required points and miles for air travel or hotel stays from the various reward programs is then used to calculate an effective earnings rate for each card. That allows our readers to make the most informed choices. By putting a card’s large one-time bonus or earnings rates into context across many dimensions and card features, they can more readily weigh the card’s benefits relative to its costs. Uncovering the true but often opaque redemption value of rewards points or miles is, we feel, the only reliable way to make cogent choices among competing value-based cards.
Card Features We Score
As mentioned in our methodology explanation, we place significant weight on certain travel-related features in determining our ratings for each card. Specifically, we place over 50% of our overall assessment score on the combination of the following factors:
- Maximum value of any one-time bonus, whether in points or miles.
- Initial card spending required to earn any bonus.
- Redemption value of the bonus miles or points.
- Global card acceptance, as detailed by the four card networks (Visa, Mastercard, American Express and Discover).
- Options to redeem points or miles with travel partners, both airline and hotel.
Another consideration are the cards’ coverage, if any, in these travel-related areas:
- Car-rental collision insurance, whether primary or secondary.
- Travel accident insurance.
- Lost or delayed luggage insurance.
- Insurance for trip cancellation, interruption, or delay.
- Cell phone loss or damage.
- Roadside assistance and towing.
- Emergency travel medical/dental benefits.
General, non-travel related features that we consider and score include:
- Interest rates, including both introductory and regular APRs for purchases and balance transfers.
- Fees, including those for annual membership, late payments, cash advances and foreign transactions.
- Security/customer service features.
- Other non-travel benefits, such as free credit scores, ID theft protection and contactless payment capability.
How We Reach Our Final Assessments
We rely mostly on the objective scores created by our rating algorithms to determine which card is chosen as the best travel rewards credit card, as well as the ones deemed best for one-time bonuses and as co-branded airline and hotel choices.
However, we may make some adjustments from time to time, to both features and weightings that could affect rankings, which can be influenced by subjective input from our credit card experts. Any potential modifications will be consistent with Investopedia’s belief that consumers are best served by travel cards that:
- Provide superior value in earning awards travel.
- Charge reasonable interest rates in the event that balances are carried month to month.
- Charge fewer and/or more reasonable fees.
- Provide solid customer service, based on the number and quality of customer service features
- Have helpful and protective security features.
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