How to Choose a Balance Transfer Credit Card: Complete Guide

Balance transfer credit card is a great deal for anyone looking to move or consolidate expensive debt. The deal gets even better when you are willing to put in a little time and research. Luckily, we’ve clipped together an extensive guide to every single transfer card feature, complete with a list of our favorite cards.

The purpose of a balance transfer credit card

A balance transfer credit card is differentiated from other credit cards by a couple prominent features. It has a promotional period with zero interest rate. More importantly, it allows you to transfer balances from other credit cards. The intended use is to move an expensive debt (or several) to where there is no interest rate and pay it off before the promotional period ends. Naturally, there are a number of drawbacks and some variance across different cards. We recommend taking a look at our guide below and learn how to spot a good deal.

The features of a balance transfer credit card

A balance transfer credit card has a dozen of noteworthy characteristics. About half of them are identical across all cards. The other half provides enough variance to justify doing some research before making a final decision.

Transfer fee

When the balance is moved from one card to another, the accepting bank charges a fee. The fee is calculated as a percentage of the transferred balance. Most banks have it set at 3%, but it could be as high as 5%. When the balance transfer is used right (e.g. paid off within the promotional period), that fee is your only cost and is easily offset by the absence of interest. Nevertheless, it wouldn’t hurt to have a look around in case there is a better deal – sometimes there is a temporary offer of no-fee balance transfers.

Another important note on a transfer fee is the way it’s handled. You don’t have to pay it upfront. It is instead added to the transferred balance and becomes a part of your new balance. Furthermore, the fee should fit within your new credit limit. e.g. if you have a credit limit of $10,000 and fee of 5%, you can only transfer $9,500 leaving room for a $500 fee.

Promotional interest rate (APR)

During the promotional period, balance transfer cards have two types of interest rates. One is applied to the balance transferred and another is applied to the purchases made with the card. Normally, both rates are 0%, but sometimes the purchase rate might be higher or have a shorter duration than the balance rate.

It shouldn’t be of importance, since we do not recommend using transfer cards to make new purchases. However, if you are planning to, make sure to check the terms for both rates.

Promotional period duration

Most cards have a promotional period of 15 months, but the range is between 14 and 21 months. Actually, the full range is up to 36 months, but the cards with very long promotional periods usually have a promotional interest rate of 5% or more and a number of other conditions that make them unappealing. After the promotional period is over, you will be charged a regular interest rate on whatever is left of your balance and on the new purchases.

Rewards

Here, again, the split is 50/50. Half the cards come with rewards and the other half comes without rewards. Most people don’t make any purchases and do not keep the card after the balance is paid off. For them, the rewards don’t matter. But if you are planning to use the card actively, then you might want to look into reward options. Most commonly, you’d have either cash back or points at a low rate and some kind of conditional introductory bonus.

Regular interest rate

A regular interest rate is what you are going to be charged once the promotional period is over. You can find it within the terms and conditions, and it is expressed as a range. The usual range rests somewhere between 12% and 25%. Your exact interest rate is determined based on your creditworthiness but tends to be a little higher than it would have been on a non-transfer card. That’s why transfer cards are not recommended for revolving credit.

Penalties

There is a late fee and a penalty interest rate, both of which you should be familiar with. The penalty interest rate on a balance transfer credit card is a little different though. It could be applied during the promotional period, canceling out the promotional APR. The good news is some cards don’t have a penalty rate altogether, so it’s worth researching that aspect in advance.

Credit requirements

Transfer cards are a form of debt relief. Ironically, they are only available to people with good credit  and a favorable debt-to-income ratio. If you really need a balance transfer to help you with your debt, then you are probably not the right candidate. Even though there are some cards, like Chase Slate®, that go easy on the credit score requirements, still you’d have to at least fit in the “average” bracket. In short, it is not a likely instrument for bad debt.

Testimonials

Balance transfer credit cards do not always deliver as advertised. One way to learn about possible pitfalls is to go through card reviews, and see whether certain complaints are repeated more often than others. A common complaint is about credit and transfer limits. Transfer limit is capped at $15,000 for all transfer cards. The actual amount you are approved for may be much lower. It is not uncommon for someone with a credit score of 750+ to be approved for a balance transfer of a couple thousand. Although we suspect that in many cases debt-to-income ratio may be to blame, we still recommend skimming the review section to set reasonable expectations before your application.

A word of caution on balance transfer cards

Balance transfer cards are amazing instruments when used right. However, they do create new opportunities for making poor financial choices. Let’s review what those poor choices are.

Accumulating new debt

When you open a new card, you increase your overall credit limit. And for some people, debt is like gas – it fills all the room it has. It is all too common to open a transfer card and unload the debt from some of the old cards and then, experiencing a fake sense of relief, charge those old ones up again. This is one of those temptations you have to be ready to withstand when doing a balance transfer.

Failing to make the payments

Regular interest rates on balance transfer cards tend to be above what you get on other credit instruments. If you are not paying the debt aggressively or at all, you are going to face those interest rates either after the promotional period ends or even sooner, in the form of a penalty interest rate. Yes, you’d postpone the payments, but in the end, you’d only make your debt more expensive. And the option of making another balance transfer is likely to be closed as no bank will offer a balance transfer to someone who has just failed to use one properly.

Hurting your credit score

The most immediate damage is going to be from a hard pull when applying for a balance transfer credit card. Your score is going to drop about 10 points but recover within a couple months. A less obvious risk comes from what you are going to do with your old cards that are now paid off. Keeping them is going to tempt you to create new debt, but closing them will shorten your average age of accounts and increase your credit utilization, both of which will do long-term damage to your score. Not as much damage as creating new debt, so it’s up to you to choose the right option.

Our top picks for balance transfer cards

Among our favorite features are low fees and absent penalties. We also tend to look at products available nationwide, which, to be honest, also offer the best terms. If, however, you are a former or a current client at all of those banks, try researching some local offers – there might be some hidden gems.

Chase Slate® photo Chase Slate® See terms on Chase’s secure website.
Intro period:
15mo
Balance Transfer Intro APR:
0%

0% Intro APR for the first 15 billing cycles that your Account is open. After that, 15.49% to 24.24%, based on your creditworthiness. These APRs will vary with the market based on the Prime Rate.

Transfer Fee:
5%

$0 Intro fee on transfers made within 60 days of account opening. After that: Either $5 or 5% of the amount of each transfer, whichever is greater.

Annual Fee:
$0

Best overall: Chase Slate®

Transfer fee

5%, free within first 60 days

Promo duration

15 months

Regular APR

16.24–24.99%

Late fees

up to $37

Penalty APR

no

Credit requirements

average/good

Rewards

no

The good

Chase Slate® has two very attractive features that are very rare among transfer cards. First, it is available to people with average credit, which is a ray of hope for someone in an actual need of debt relief. Although, we suspect that your debt-to-income ratio will still play a significant part. Second, the card offers a free of charge balance transfer, if requested within the first 60 days of account activation. That’s a very sweet deal.

The bad

Promotional period duration is 15 months, which is average for transfer cards, but falls short of 18- and 21-month offers we’ve managed to find. There are also no rewards of any kind, even though about half the cards offer at least some. Regular APR is also among the highest.

For more information check out our Chase Slate® full review.

Citi Simplicity® photo Citi Simplicity® See terms on Citi’s secure website.
Intro period:
18mo
Balance Transfer Intro APR:
0%

0% introductory APR for 18 months from date of first transfer when transfers are completed within 4 months from date of account opening.

Transfer Fee:
3%
Annual Fee:
$0

Best overall runner-up: Citi Simplicity®

Transfer fee

3%

Promo duration

18 months

Regular APR

15.24–25.24%

Late fees

no

Penalty APR

no

Credit requirements

good/excellent

Rewards

no

The good

Citi Simplicity®is often quoted to be the best transfer card, and the reason is that it has no late fees and no penalty APR. Both are nice features but not very valuable for someone who is responsible about their payments and is not at risk of suffering penalties. So, while the argument is questionable, we believe some people might find these features useful. There is another feature that we actually like, and it’s the promotional period of 18 months – among the longest out there.

The bad

There are no rewards and the transfer fee is 3%, which is average for transfer cards, but it’s still not a 0% offer from Chase Slate®.

For more information check out our Citi Simplicity® full review.

Discover it® Cash Back photo Discover it® Cash Back See terms on Discover’s secure website.
Intro period:
14mo
Balance Transfer Intro APR:
0%
Transfer Fee:
3%
Annual Fee:
$0

Best rewards: Discover it® Card

Transfer fee

3%

Promo duration

14 months

Regular APR

13.24–24.24%

Late fees

up to $37, first late payment for free

Penalty APR

no

Credit requirements

good/excellent

Rewards

1% cashback on everything

5% rotating quarterly cashback

1-for-1 cashback match at the end of the first year

The good

Discover it® Card is, by all means, an average transfer card, except for its rewards. It offers 5% cashback on selected product categories that rotate quarterly and 1% cashback on everything else. Plus, at the end of the first year, all of the cashback earned throughout the year is matched one-to-one and added to your balance.

The bad

The promotional period is meager 14 months, which is the shortest we’ve managed to find. Actually, it’s just a month shorter than the average of 15 months, so it’s not that much of a downside.

For more information check out our Discover it® Card full review.

Chase Freedom® credit card photo Chase Freedom® credit card See terms on Chase’s secure website.
Intro period:
15mo
Balance Transfer Intro APR:
0%

0% Intro APR for the first 15 billing cycles that your Account is open.

Transfer Fee:
5%

Either $5 or 5% of the amount of each transfer, whichever is greater.

Annual Fee:
$0

Best rewards runner-up: Chase Freedom®

Transfer fee

5%

Promo duration

15 months

Regular APR

16.24–24.99%

Late fees

up to $37

Penalty APR

no

Credit requirements

good/excellent

Rewards

1% cashback on everything

5% rotating quarterly cashback

$150 bonus if $500 spent in first 3 months

The good

In terms of rewards, Chase Freedom® is very similar to Discover It® Card, with the exception of its bonus offer. You get $150 added to your balance if you manage to spend $500 within the first 3 months of opening the account. That’s a reasonable offer and, depending on your spending, might be even more generous than the one from Discover.

The bad

The balance transfer fee is 5%, which is almost prohibitive. A fee that high makes you question the value of rewards and probably works out with small balance transfers only.

For more information check out our Chase Freedom® full review.

Citi® Diamond Preferred® Card photo Citi® Diamond Preferred® Card See terms on Citi’s secure website.
Intro period:
21mo
Balance Transfer Intro APR:
0%

0% introductory APR for 21 months from date of first transfer when transfers are completed within 4 months from date of account opening.

Transfer Fee:
3%

Either $5 or 3% of the amount of each transfer, whichever is greater.

Annual Fee:
$0

Longest promo period: Citi® Diamond Preferred® Card

Transfer fee

3%

Promo duration

21 months for the balance

12 months for new purchases

Regular APR

14.24–24.24%

Late fees

up to $35

Penalty APR

29.99%

Credit requirements

good/excellent

Rewards

no

The good

Citi® Diamond Preferred® Card has the promotional period of 21 months, which is unheard of among 0% APR cards. That should be of great help for anyone looking to move bigger balances and pay them off at a slower pace.

The bad

Promotional period comes with a catch. While it’s 21 months for the balance, it’s only 12 months for new purchases, so it’s probably best not make any with that card. Another downside is the penalty APR of 29.99%.

For more information check out our Citi® Diamond Preferred® Card full review.

Honorable mentions

There is a couple of cards that didn’t quite fit but still have a worthy feature or two:

BankAmericard® Credit Card, for example, also offers free balance transfers within the first 60 days. Anything transferred after the first 60 days is not eligible for the promotional interest rate at all. It’s a bit of a double-edged sword.


Then we have Amex EveryDay® Credit Card and Blue Cash Everyday® Card. Both of those cards offer reasonable rewards, although not as good as our top picks.


And, just in case nothing else fits, we’ve got HSBC Gold Mastercard® credit card. It offers 18 months of promotional period and one of the lowest regular APRs. Downside – no rewards and an odd 4% balance transfer fee.

Leave a comment if none of our picks fit your particular circumstances, and we’ll get back to you with additional suggestions.

The bottom line

A balance transfer credit card is a great place to store an expensive debt and finish it off within the promotional period. We don’t know of a better deal than a year or more of no interest rate. There is no reason it shouldn’t be taken advantage of. That is, if your intention is really to pay off your debt. In case all you want is to postpone your debt or you feel like the risks we mentioned in this article apply to you, you might want to consider alternative forms of debt relief. Otherwise, do your research, pick your card and come share your success story once you are debt free. Good luck!
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