Who likes paying interest? Nobody! Yet, that’s exactly what we sign up for when we open a credit card or take out a loan. It’s the compromise we make for being able to have spending power to cover life’s expenses right when we need it. But even though we commit ourselves to paying interest, that doesn’t mean we can’t minimize how much we end up paying by the time we satisfy a debt.
This is where balance transfers can be a big help. You can transfer your high-interest debt from an older credit card to a card that offers a 0% intro APR for balance transfers. Then you make payments during the introductory period to reduce or pay off the debt, potentially saving thousands of dollars in interest over many years of payments. Even if you can’t pay off the whole balance in the allotted 0% APR timeframe, your savings can still be huge.
Here is how balance transfers work and four of the longest balance transfer credit cards with a 0% introductory APR period.
How do balance transfers work?
Balance transfers are simple to understand. You open a credit card account that offers a long introductory period at 0% APR. Then, you work with the issuer to use your available credit to pay off other high-interest debts you may have.
Once the debts are paid with your new card, you make monthly payments aimed at reducing that total amount by the time the introductory period is over. If there is still a balance, you can do the same thing all over again with a new 0% APR balance transfer card.
What this does is buy you some time to ensure every monthly payment you make is applied to the balance of the card, rather than interest. When you have a balance on a credit card that charges you any amount of interest, as little as 1% of your monthly minimum payment is applied to your balance and 99% pays for the interest accrued for that month.
By taking the interest out of the equation, you’re able to continue to make the same payments — or higher ones if you can swing it — and see a much greater and faster reduction of your debt. This can save you many years of paying interest charges that are exponentially more than the amount you originally charged.
Common mistakes to avoid
While using a 0% APR balance transfer strategy can be very powerful for reducing debt, there are a few things to watch out for.
The first is adding purchase charges to your balance transfer card. If you read the terms and conditions that come with your balance transfer card, you may find that your monthly payments get applied first to purchases you make before being applied to the balance you’re trying to pay off. This can undermine your intentions of paying off the balance before the end of the introductory period.
The second thing to look for is balance transfer fees. Be prepared to pay between 3% and 5% of the amount you transfer as a fee. This amount is added to the total amount you will owe and lowers the total amount you can transfer. Most credit cards will not allow you to transfer more than your credit limit and they will apply the balance transfer fee first.
For example, if your limit is $5,000 and you have a 5% balance transfer fee, you wouldn’t be able to pay off a full $5,000 worth of other debts as a $250 fee would be added to your balance, putting you over the limit.
Third, you don’t want to fall into the trap of making charges on the cards you’ve just paid off. Your goal is to lower your overall debt and usage of revolving credit. When you transfer a balance from an existing card to a new card, you increase the amount of credit available to you and reduce the ratio of how much is being used. Both of these are substantial factors in calculating your credit score. If you add charges to the cards you’ve just cleared, you increase your credit usage ratio and overall debt, which will reduce the positive impact you’re trying to make.
Finally, be aware of how long you have to pay off your balance without accruing interest. It’s easy to let the months go by without realizing you’re not as far along paying off your balance as you want to be. Keep on top of where you are with your payments and figure out how much you need to pay monthly to get down to a $0 balance. Even if you can’t, the amount of interest you pay on the new amount will still be less than you were paying before the transfer. But the goal should be a complete balance payoff.
Longest balance transfer credit cards
- Citi Simplicity
- Citi Double Cash
- Wells Fargo Platinum Visa
- HSBC Gold Mastercard
At a whopping 18 months, the Citi Simplicity has a very long 0% introductory APR. The balance transfer fee of $5 or 3%, whichever is greater is within the norm of what credit cards typically charge. Transfers need to be completed within the first 4 months of opening the account for the introductory APR to apply.
This card comes with a $0 annual fee, no late payment fees, and no penalty APR rates. You can also choose your payment due date, which makes monthly budgeting easier. Overall, this is a solid card to investigate.
No annual fee & 0% Intro APR
Citi Double Cash
The Citi Double Cash card has a lot going for it if you’re looking for a balance transfer option. Not only do you get 18 months of 0% APR on transfers made within the first 4 months of opening the account, you also get cash back on your day-to-day transactions and a $0 annual fee. The balance transfer fee is $5 or 3%, whichever is greater.
Generally, we don’t recommend making additional purchases on a card you transfer balances to. However, if you charge items you would normally pay for in cash to this card, then pay that balance off right away, you can take advantage of Citi’s cash back feature. You will earn up to 2% cash back on all purchases: 1% as you buy and 1% as you pay, which can lower your transfer balance.
Earn Cash Back Twice
Wells Fargo Platinum Visa
With the Wells Fargo Platinum Visa, you’ll get a 0% introductory APR for 18 months. The $5 or 3%, whichever is greater for first 120 days; after that, $5 or 5%, whichever is greater. You can make additional balance transfers after the first 4 months, however the 0% APR won’t apply and the transfer fee goes up.
Compared to some of the other cards on this list, the Wells Fargo Platinum Visa is a little light on extra features. There is a $0 annual fee, and the 0% APR also applies to purchases made within the first 18 months of opening an account. However, the card does come with some travel perks other cards don’t have. These include auto rental collision damage waiver, roadside dispatch, travel accident insurance, travel and emergency assistance services, and cell phone protection.
HSBC Gold Mastercard
With the HSBC Gold Mastercard, you’ll get a 0% introductory APR for 18 months on balance transfers requested within 60 days of account opening. The balance transfer fee is $10 or 4%, whichever is greater. The 0% APR will also apply to purchases made within the first 18 months of opening the account.
In addition to all of this, the HSBC Gold Mastercard offers a bunch of travel benefits, including no foreign transaction fees, protection against physical damage and theft for most vehicle rentals, travel accident insurance, and 15% savings on airport meet-and-greet services. The card also has a $0 annual fee, identity theft protection, and emergency card services.
|Card name||Intro APR on balance transfers||Balance transfer fee|
|Citi Simplicity||0% for 18 months||$5 or 3%, whichever is greater|
|Citi Double Cash||0% for 18 months||$5 or 3%, whichever is greater|
|Wells Fargo Platinum Visa Credit Card||0% for 18 months
||$5 or 3%, whichever is greater for first 120 days; after that, $5 or 5%, whichever is greater|
|HSBC Gold Mastercard||0% for 18 months on balance transfers requested within 60 days of account opening
||$10 or 4%, whichever is greater|
FAQs about balance transfers
Do balance transfers affect your credit score?
Though your credit score may take a hit when you’re applying for a balance transfer card as a result of one or more hard inquiries to your reports, overall, transferring a balance from one card to another is a good thing for your score.
First, it increases the amount of revolving credit you can access while keeping your total debt owed the same. This is a powerful factor in boosting your score. Second, as long as you make timely payments in amounts aimed at reducing the balance on your new 0% introductory APR card, you are making good progress in lowering your total debt. This, too, will have a positive effect on your credit score.
It’s important to remember not to increase your debt during this period, even though it may be tempting when you have a $0 balance on one or more cards. This will hamper the efforts you’re making by paying down your balance transfers.
How long does it take to transfer a balance from one credit card to another?
Generally, you can expect to have some or all of your balance transfers completed between 3 to 21 business days after initiating the request. This is because you’re not so much actually transferring a balance from one card to another as you are paying off the debt from one card with your new one.
How long this can take depends on how your new card is making the payment(s). They may send the funds electronically to the accounts you’re paying off, by physical check, direct deposit to your checking account, or even sending you checks to use to pay your creditors. Electronic transactions usually take place sooner than those that are paper-based.
How much does a balance transfer cost?
Balance transfer fees usually range between 3% and 5% of the amount you’re paying off.
Can I transfer a credit card balance twice?
If you reach the end of the introductory period on your 0% APR credit card and you haven’t paid off the amount you transferred, you can search for a new card to transfer the balance to. Generally, you won’t be able to do this if you open a new card account with the same bank that issues the card with the balance you want to transfer. You’ll need to look for a different bank.
The final word on balance transfer cards
Now that you know how to use balance transfer credit cards to pay down debt and boost your credit score, it’s time to go shopping. We’ve given you our top-choice cards to get started. As you continue your research, make sure to look at the longest balance transfer credit card you can find, transfer fees, how long you have to make transfers at 0% APR, and the terms and conditions for paying on the card.
Once you take the balance transfer plunge, watch out for the pitfalls discussed earlier, such as making charges on cards that have been paid off and not paying off the balance before the introductory period is over. Keep all of this in mind, and you’ll be on a strong path to making some major improvements to your overall financial picture.