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Reviewed / Tara Jacoby
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Reviewed / Tara Jacoby
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If you’re making credit card payments but not seeing a dent in your balance, this revelation may come as a relief: You’re not just imagining things. Part of your monthly payment goes to interest before it even touches the principal. Using a balance transfer card could help you pay off that credit card debt faster.
Balance transfer cards offer a low-interest or zero-interest introductory special for balances you move from an old card to a new card. Typically, the special lasts for 12 to 18 months. During this time, you can attack the principal balance without worrying about interest getting in the way.
We dug through dozens of offers to bring the best balance transfer credit cards to consider.
Before we start, here are some things you should know about balance transfer cards:
Good credit or better is usually necessary to qualify. A credit check is typically required at application, and the hard inquiry could temporarily impact your credit score.
Credit card issuers often charge a fee for transferring your balance. This fee is generally 3% of the balance you transfer. So, if you transfer $3,000 to a balance transfer card, you could expect to pay around $90 for the fee. While the fee does eat into your potential savings, it could majorly outweigh the interest you’d pay with your current card.
Credit limits vary. Your credit limit is usually determined after you apply, so there’s a possibility that you might get approved for a credit limit that’s lower than the balance you want to transfer. Also, credit card issuers may set limits for how much money you can move. Chase, for example, lets you transfer up to $15,000 within a 30-day period.
Transfers need to be made within a certain amount of time. Usually, only balances transferred within the first one to four months of signing up qualify for the low-interest deal. As always, read a card’s terms and conditions before you sign on the dotted line.
Perhaps the most important thing to note: Interest increases after the introductory period. After the low-interest deal ends, interest jumps up to the standard interest rate that’s based on your creditworthiness. To get the most out of a balance transfer offer, get a game plan in place. You’ll want to know what monthly payments to make to pay off the transfer within the interest-free period. Otherwise, the interest you end up paying will cut into your savings.
My name is Taylor, and I’m a personal finance writer who’s been reviewing credit cards and rewards programs since 2015. For this roundup, I took a look at 17 balance transfer cards to review what they had to offer. Then I compared balance transfer fees, the length of the low-interest period, and other card costs and features to come up with this “best of” list.
For this list, we focused on the balance transfer offer and related fees. Many cards that didn’t make the cut have shorter 0% APR periods but still come with plenty of valuable benefits and rewards opportunities. (That’s why you’ll find picks from our best grocery credit cards and best no-annual-fee credit cards below.)
Depending on your situation, these may still be a viable option if you can work with a tighter 0% APR timeline and want to take advantage of perks after paying off the balance.
No annual fee
High reward rate
Robust rewards program
Requires excellent credit
No annual fee
Gives free access to your FICO Score
No rewards
No annual fee
High reward rate
Spending limits on rewards
No annual fee
High reward rate
Robust rewards program
Some spending limits on rewards
No annual fee
High reward rate
Gives free access to your FICO Score
Some spending limits on rewards
No annual fee
Robust rewards program
High reward rate
Spending limits on rewards
Membership required for best rewards
No annual fee
No membership fees
No rewards
Foreign transaction fees
No annual fee
High reward rate
Robust rewards program
Foreign transaction fees
No annual fee
No foreign transaction fees
No rewards
Please note: The offers mentioned above are subject to change at any time and some may no longer be available.
Reviewed has partnered with CardRatings for our coverage of credit card products. Reviewed and CardRatings may receive a commission from card issuers.
Break out a calculator. You’ll want to make sure that opening a new card will save you money in the long run. To start, figure out what you’d pay in interest with your current credit card debt if you were to pay it off in 18 or so billing cycles.
With an introductory APR period, you’ll save on interest—but don’t forget about those fees. They typically range anywhere from 3% to 5%, though we’ve found a couple that forgo balance transfer fees. (And remember, it’s likely transfers must be completed within a set time frame, usually around 30 or 60 days.)
Look at the timeline. You may not know the credit limit on a card you haven’t opened, but take the amount you’re hoping to transfer. Divide it by the interest-free period to come up with a monthly payment plan. Is it reasonable with your budget? Don’t forget: Once the introductory period ends, a variable APR based on your creditworthiness will kick in, and you’ll pay interest on anything outstanding.
Consider your credit score. Opening a new card affects your credit health a few ways. For one, the application typically requires a hard inquiry that will temporarily knock your score. A new account will also lower the average age of your credit history, another factor that’s used to determine credit health. Your credit utilization will change, too. A new card with the transferred balance may nearly max out your credit limit, though it’ll increase your overall credit limit.
Credit card annual percentage rates range from 13% to 25%, with the national average in January 2021 around 16%. Credit cards marketed for applicants with bad credit tend to be on the higher side, as do credit cards with rewards programs.
Before you apply for a credit card, you can see this range in the cardmember agreement. You won’t know the rate until you’re approved, as it’s determined by the issuer based on your creditworthiness. The higher your credit score, the lower the rate you can expect. Remember that with a variable rate, an issuer can change the interest it charges at any time—and, per your cardmember agreement, it may not have to notify you.
An issuer may charge a different APR for purchases, balance transfers, and cash advances. It may even offer an introductory rate that includes zero interest for a period of 12 to 18 (or 21) months. Lastly, a penalty APR may kick in if you’re late for a payment, exceed your credit limit, or break other terms and conditions laid out by the issuer.
We’ll say it till we’re blue in the face: Pay off your balance each month, and you won’t have to think about interest.
Despite the term “annual percentage rate,” credit card issuers calculate interest daily. The daily periodic rate is determined by dividing your APR by 365 days, which is then applied to your average daily balance. Crunch this number by adding up the total you carry each and every day of the billing cycle, and then dividing that by the number of days in the billing cycle.
Let’s say your card’s APR is 16%, and this month you carried an average daily balance of $2,000. The issuer first calculates the daily periodic rate (0.16 divided by 365). That rate (0.00043) is applied to your average balance (0.00043 x $2,000), which brings us to 0.87. Over the course of the 30-day billing cycle (0.87 x 30), you’ll pay $26.30 in interest.
If crunching numbers isn’t really your thing, some issuers include tools that calculate how much interest you’ll owe based on your monthly payment. Petal, for example, shares this information in a mobile app for its two credit cards.
Remember: You won’t be charged interest if you pay off your balance in full and on time each billing cycle. We get that life happens. So if on occasion that’s not possible, consider paying more than the minimum amount to lessen the interest you’ll pay over time, or make more than one payment during the billing cycle to lower your average balance.
We hate to break it to you, but there’s no one-size-fits-all answer here. The right number for you depends on what you can responsibly manage.
Does having a piece of shiny plastic an arm’s length away often encourage you to spend money you don’t have? You may want to think twice before applying for more credit. Carrying a balance you can’t afford contributes to interest charges, and in the long run costs you more money.
If you’re financially responsible and stick to making purchases that you can pay off, there may be some upsides to adding another card to your arsenal. For instance, if you’re a jet-setter without a card that rewards you for hitting the road, a travel card may make sense for you.
There are a few other things to consider before opening a new account, like adding a different payment processing network, or taking note of any annual fees.
Pay your outstanding balance and redeem any rewards. Then, call the issuer to confirm you have no balance, and ask to close your account. But before you pick up the phone, there are a few things to consider.
First, your score is based partly on the length of your credit history. Closing an older account will temporarily knock your score. If you’re applying for a mortgage in the near future—or anything else that may require a credit check—think twice about the timing.
Saying goodbye to a card also means you’ll have less credit available. And that means your utilization ratio will likely go up. (If you need a refresher: That’s the balance you carry divided by your credit line—and finance experts recommend keeping this at 30% or less.) Your utilization ratio is another major factor in calculating your score. In addition to being mindful of your balance, you can ask another issuer to increase your limit to help out a little.
Keep in mind, if you’re a responsible credit user, your score will eventually rebound. But there are a few other factors to consider when deciding to close an account, such as whether you’re close to hitting a rewards milestone.
Closing the account could still be the right move for you, especially if you’re tempted to spend money you don’t have, or you feel you already have too much credit at your disposal. In that case, call the issuer and then destroy your physical card.
In a month or two, check your credit report to confirm that the account has been closed at your request. Contact the issuer if it states otherwise.
Taylor Medine is a personal finance writer with over five years of experience writing about credit, credit cards, personal loans, and money management. She's written for Credit Karma, CompareCards, LendingTree, MagnifyMoney, Student Loan Hero, and more.
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