Best Balance Transfer Cards of October 2022

What Is a Balance Transfer Credit Card?

A balance transfer is, essentially, a form of debt consolidation. Whether you accrued debt through long-term overspending, a period of temporary financial hardship, or from a loan with less-favorable terms, transferring the balance to a credit card with an introductory 0% interest rate can help you pay down your debt faster.

This strategy is beneficial because it applies payments you make throughout the introductory period directly to your principal balance, rather than having a significant portion of each payment go toward interest that’s accrued since your last payment. This is especially useful for credit card debt balances, given their substantial interest rates and daily interest accrual.

Keep in mind that a balance transfer can impact your credit. Opening any new credit card can have a temporary negative effect on your credit score, but paying down debt can ultimately help boost your score by lowering your credit utilization ratio and increasing your record of ongoing timely payments. 

How Much Can I Save With a Balance Transfer?

A balance transfer can potentially save you thousands of dollars, depending on your particular debt. Consider this example between two different balance transfer scenarios to making minimum monthly payments on a regular card. These numbers assume a balance of $5,700 and an ongoing interest rate of 16% outside of the intro period. 

Even if you’re unable to make the required monthly payments to pay off your balance in full, you will take on interest after the intro period ends. It may take more time to eliminate the debt altogether, but you can still save money with a balance transfer by prioritizing paying down as much of your principal balance as possible during this time.

Pros and Cons of a Balance Transfer

How To Do a Balance Transfer

The journey to debt payoff can depend on your circumstances and financial situation. Here’s how balance transfers work for most credit card issuers:

1. Review your financial situation: Check your current debt balance and determine how much you can dedicate to monthly payments.
2. Find a balance transfer card with an introductory period that aligns with your payment ability and debt. Don’t forget to account for any fees that may apply.
3. Make sure you have a good chance of approval before applying for the card. Read the fine print of the card’s terms for details on penalties or balance transfer restrictions.
4. After approval, request your balance transfer. The clock starts on your intro period after approval, so act quickly to maximize the period in full.

Balance Transfer Limits 

Your balance transfer credit card’s limit will depend on your issuer, card, credit history, and other factors. The card’s overall credit limit determines how much you’re allowed to transfer, in addition to the balance transfer fee. For instance, you cannot transfer $5,000 if your limit is $5,000 and you have a 3% balance transfer fee. 

If you have a very high debt balance and you’re approved for a limit lower than your debt, you can still benefit from the balance transfer. Consider continuing to pay off as much debt as you can on your existing account while you also work toward paying down the balance transfer card. Before opening any balance transfer card, you should have a debt payoff plan in mind that aligns with the card’s intro period.

Before you apply, you can also make sure you’re getting the best credit limit possible by establishing good to excellent credit and listing all of your income when applying for the balance transfer credit card.

How To Compare Balance Transfer Cards

The right balance transfer offer should help you reduce as much existing debt as you can afford before interest kicks in. Your individual financial details — your total debt, amount you’re able to pay monthly, other financial obligations, etc. — can help you choose the card best suited for your debt payoff goals. As you compare offers, consider these card details:

• Introductory Period: Intro periods may last 6, 12, 15, or 18 months (the highest available today is 20 months). A smaller balance may take less time to pay off, while a longer intro period can give you more flexibility to pay down a larger balance.
• Balance Transfer Fee: A typical balance transfer fee ranges 3%-4% of your total balance, with a minimum of $5 or $10. There are also cards that charge no balance transfer fees, though they may offer shorter 0% interest intro periods. 
• Other Fees and Penalties: Some balance transfer cards charge an annual fee along with other fees for late payments, returned payments, and more. You may also incur a penalty APR and even have your 0% interest offer revoked for late or missed payments. Review the penalties your card may charge (and how to avoid them) before applying.
• Ongoing variable APR: Any remaining, unpaid balance at the end of the intro period will accrue interest at your assigned variable APR, along with new balances you carry on the card. These high interest rates can lead to more debt quickly, so it’s important to avoid carrying a balance whenever you can. Ignoring your APR is a common credit card mistake which can be detrimental to your credit and finances.
• Rewards and Benefits: A card with ongoing rewards and benefits can add value to your spending after your debt is paid — if you pay any new purchases off in full each month. Consider how a balance transfer card with rewards or benefits might fit with your spending habits and maximize your purchases over time.

How To Maximize Your Balance Transfer Credit Card

The purpose of a balance transfer card is to pay down as much existing debt as you can throughout the intro period, before you accrue interest. Before applying, take time to establish a payoff plan and stick to it throughout the intro period. Here are a few strategies that can help you further maximize your balance transfer.

1. Start Early

Take full advantage of your intro period. If your issuer allows, apply for the balance transfer along with your card application. The clock starts on your intro period after account opening, so the sooner you can transfer your balance and begin paying down that principal, the better.

2. Calculate Your Payments

Do the math to determine how much you actually need to pay each month to pay your balance in full by the end of the introductory period. This is why it’s important to make sure it’s the right time for your debt payoff before you apply; the best way to maximize a balance transfer is by paying your debt in full before interest starts to accrue.

3. Make Extra Payments

If you receive extra money throughout your card’s intro period — a tax refund, for example, or cash gift — consider using it to make extra payments toward your debt. You can give yourself some added flexibility for future payments, or pay your balance down earlier than expected.

4. Don’t Take on More Debt

Dedicate your balance transfer card solely to debt payoff. Unless an emergency arises, don’t make any purchases with your new card over the course of the intro period. You also don’t want to risk coming too close to your credit limit and taking a hit to your credit score with a higher utilization ratio.

Alternatives To a Balance Transfer

Given today’s economic and interest rate environment, balance transfer offers are relatively scarce. Not only have many issuers pulled back their balance transfer terms, but some, including American Express, Capital One, and Chase, have temporarily eliminated introductory balance transfer offers altogether. 

If you have bad credit or a limited credit history, it will be difficult to qualify for a balance transfer card in 2020. That doesn’t mean you don’t have options, though. 

You may have a better chance of qualifying for a balance transfer with a local credit union or regional bank. But if your credit isn’t great right now, continuing to slowly chip away at your balances can help improve your credit and put you in a better position to apply for a balance transfer card further into your debt payoff journey. Consider different methods of debt consolidation, such as debt management plans or personal loan consolidation. 

Frequently Asked Questions About Balance Transfer Credit Cards

Methodology

To determine the best balance transfer credit cards, NextAdvisor’s editorial team evaluated  balance transfer offers on cards currently accepting applications from major card issuers and networks based on national average consumer debt and interest rate data. 

We calculated overall savings, monthly payment, fees, and payoff period compared to paying off the same balance on an average credit card. You’ll see a breakdown of how these factors compare under each of our picks. We also considered intro APR, intro period length, time limit to request the balance transfer, fees, and ongoing APR. For cards with ongoing rewards, we accounted for rewards value over time.

*All information about the U.S. Bank Visa® Platinum Card, HSBC Gold Mastercard credit card, Navy Federal Credit Union Platinum Credit Card, and SunTrust Bank Prime Rewards Credit Card has been collected independently by NextAdvisor and has not been reviewed by the issuer.