If you have a growing pile of credit card debt, you might be interested in finding a way to lower your interest rate, dig out of debt, and turnaround your finances. That’s where balance transfer credit cards come in.
Balance transfer credit cards give you the ability to merge your credit card balances into one new credit card with a lower interest rate. This gives you a window of time to make big, principal only payments and get out of debt for good.
Sound like something that would help you? Let’s dig into what a balance transfer credit card is, how it works, and how you can take advantage to permanently fix your finances.
What is a balance transfer credit card
A balance transfer credit card is a type of credit card that allows you to transfer in balances from other cards. For example, if you have two credit cards with a $2,000 balance each, you may be able to combine them with one balance transfer card with a $4,000 balance.
A balance transfer can help you in several ways. It helps you reduce the number of payments you make per month. It helps you simplify and better control your debt. It helps you see debt payoff progress more clearly. But that isn’t the biggest benefit.
The biggest benefit of a balance transfer credit card is saving money!
You should only do a balance transfer when you can move higher interest debt to a lower interest credit card. Credit cards charge 10%, 20%, or nearly 30% interest on outstanding balances. If you can move from high interest to low interest, you are bound to save money.
Ready to make that work for you? In the next section, we will take a look at how to choose the right balance transfer card for your needs.
Choosing the right balance transfer credit card
If you are sold and want to get started with a balance transfer to save money, you have a big decision to make on where you want to transfer your balances. To choose, you should consider some important criteria.
Introductory period - The first place to look at a balance transfer credit card is the interest rate. But not the regular interest rate. You care about the introductory interest rate. Some cards offer 0% APR for over a year, which means no interest charges!
Ongoing interest rate - Once the introductory period ends, what does this card charge? Interest rates can change with market rates, but you’ll get a good idea of how cards compare when you look at the application, terms, and conditions.
Balance transfer fees - When you move your balances from your old card to your new card, you may have to pay. Balances transfer fees can make sense if you will save in the long-term, but factor that in when picking a balance transfer credit card.
Other fees and costs - If you plan to use the card for purchases, consider other fees, costs, and benefits that come with the card. For example, foreign exchange fees and cash advance fees if you ever plan to use the card abroad or for cash at an ATM.
Sound overwhelming? Don't stress, we've got you covered. Take a look at our favorite balance transfer credit cards here to ensure you make the right choice.
How to do a balance transfer
Once you choose your balance transfer credit card, you have a few steps to follow to make it all work. For this example, we will use the Chase Slate credit card, our number one pick for the best balance transfer cards on the market today.
Step 1: Research. Compare your current credit card interest rates to the Chase Slate card, which currently charges a competitive, low-interest rate. But it is not the lowest rate out there. Remember, only transfer if it will save you money on interest.
Step 2: Apply. You can’t do the balance transfer until you have the credit card account. For Chase Slate, you would apply here to start.
Step 3: Enter your balance transfer details. Either in the application process or shortly after, you should be able to find a form to enter your balance transfer online. Alternately, you can use convenience checks that come in the mail from your credit card. That’s it!
Once you enter your balance transfer or send your form to your new card issuer, they will pay off your old balance and charge the balance to your new account. Now you only have to make one monthly payment and should be saving big on interest.
Chase Slate gives you 15-months with no interest, which hopefully is enough time to pay off your balances in full so you won’t have to pay interest again in the future.
Using a balance transfer to fix your finances
Some people think they are savvy when they move balances from card to card to avoid interest. The smartest people take advantage of a balance transfer offer to pay off their debt permanently. No good comes from paying credit card interest, so you should do everything possible to avoid it.
Balance transfers are a great option for some people, but not everyone. If a balance transfer does make sense for you, plan out everything ahead of time and double check your math to make sure it all works out. If it does, good luck with your balance transfer. You may be debt free before you know it!
Editorial Note: This content is not provided or commissioned by the credit card issuer. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through a credit card issuer partnership.
This article was last updated May 22, 2018 but some terms and conditions may have changed or are no longer available. For the most accurate and up to date information please consult the terms and conditions found on the issuer website.