A guide for those looking to determine whether or not a 0% balance transfer card will help them get out of debt.
What is a 0% balance transfer card?
A balance transfer involves moving your outstanding credit balance from one account to another with a lower interest rate.
A 0% balance transfer card is the ideal tool for this scenario, offering an introductory APR of 0% for a limited time (usually between six and eighteen months). You’ll have a brief window to aggressively pay down your debt without any interest getting in the way.
Pro tip: If you have good credit, a balance transfer credit card can be an excellent debt consolidation method. Roll multiple debts into one monthly payment and pay down as much as possible while you’re not paying interest.
Best balance transfer credit card offers with no annual fee
Wells Fargo Reflect Card: This card offers 0% intro APR for 18 months from account opening on purchases and qualifying balance transfers. If you make all of your minimum payments during the introductory period, you’ll get another three months interest-free. After that, the card’s variable APR ranges from 17.24% to 29.24%. Balance transfers made within 120 days qualify for the intro rate and fee. It also offers cell phone protection and the access to your FICO score. Learn more
Citi Double Cash Card: This card offers a 0% intro APR for 18 months on balance transfers only; after that, the variable APR will be 18.24% – 28.24%, based on your creditworthiness. The card offers cash back (as Thank You Points) on regular purchases, but not balance transfers. There is an intro balance transfer fee of 3% of each transfer (minimum $5) completed within the first four months of account opening. Learn more
Citi Diamond Preferred Card: This card offers a 0% Intro APR for 21 months on balance transfers from date of first transfer; after that, the variable APR will be 17.24% to 27.99%, based on your creditworthiness. The balance transfer fee is either $5 or 5% of the amount of each transfer, whichever is greater. Learn more
Chase Slate Edge: This card offers a 0% intro APR for the first 18 months from account opening on purchases and balance transfers. After that, the card’s variable APR ranges from 19.24% to 27.99% variable APR. The balance transfer fee is $5 or 3% of the amount of each transfer, whichever is greater, on transfers made within 60 days of account opening. Learn more
Chase Freedom Unlimited: This card offers a 0% intro APR for 15 months from account opening on purchases and balance transfers. After the intro period, the variable APR ranges from 19.24%–27.99%. The balance transfer fee is either $5 or 3% of the amount of each transfer, whichever is greater, on transfers made within 60 days of account opening.
Bonus offer: This card currently offers a sign-up bonus of $200 if you spend $500 during your first three months from account opening. Plus, earn 5% cash back on grocery store purchases (excluding Target and Walmart) on up to $12,000 spent in the first year. Learn more
Capital One VentureOne Rewards Credit Card: This card offers a 0% intro APR for 15 months on qualifying balance transfers. After that, the card’s variable APR ranges from 19.24% to 29.24%. The balance transfer fee is 3%.
Bonus offer: This card offers a sign-up bonus of 20,000 miles after spending $500 in the first three months. It also offers 1.25 to 5 miles per $1 spent on purchases. Learn more
Discover It: This card offers a 0% intro APR for 15 months on purchases and balance transfers. After that, the card’s variable APR ranges from 16.24% to 27.24%. The balance transfer fee is 3%.
This card offers 5% cash back on everyday purchases in bonus categories each quarter. Bonus categories include Amazon, grocery stores, gas stations, etc. In addition, all other purchases automatically earn 1% cash back. Discover will double all cash back earned during your first year as a cardholder. Learn more
U.S. Bank Visa Platinum Card: This card offers a 0% intro APR on new purchases and balance transfers for 18 billing cycles. After that, the card’s variable APR ranges from 18.74% to 28.74%. You’ll get free access to your credit score. The balance transfer fee is either 3% of the amount of each transfer or $5 minimum, whichever is greater. Learn more
BankAmericard Credit Card from Bank of America: This card offers a 0% intro APR for the first 21 statement closing dates following account opening. After that, the variable APR ranges from 16.24% to 26.24%. There’s no penalty fee if you don’t pay by the due date. The balance transfer fee is either $10 or 3% of the amount of each transaction, whichever is greater. Learn more
Best balance transfer cards with no transfer fee (and no annual fee)
Cards with no balance transfer fee are difficult to come by, but there are a few out there. However the interest rate is often higher than 0%, so it’s important to calculate which will be less expensive: the low interest rate by no transfer fee, or the transfer fee and the 0% rate period.
The Navy Federal Credit Union Platinum Card: This charges a 0.99% intro APR on balance transfers for 12 months. After that, the variable APR ranges from 9.74%-18.00%. You must be eligible for Navy Federal Credit Union membership. Learn more
The Union Bank Platinum Visa card: This card offers a 0% APR on new purchases and balance transfers for 15 months after account opening. There’s no balance transfer fee as long as you transfer your balance within the first 60 days of account opening. Learn more
How do 0% balance transfer cards work?
Balance transfers are fairly straightforward in practice, though there are some potential roadblocks that might prevent you from pulling one off.
To give you a better idea of how they work, here’s a quick walkthrough of how you might go about finding and using one:
Shop around: Unfortunately, balance transfer cards can be difficult to qualify for if your score is below 670. If you’re not quite there yet, wait a while to apply since too many applications can hurt your credit score. When your score is high enough, shop around for the best deals (longest 0% annual percentage rate period plus lowest annual and balance transfer fees).
Pro tip: Be on the lookout for the lowest balance transfer fee and the longest APR offer. Pay attention to what the interest charges will be once the intro period ends. Prioritize what you’re looking for in a new credit card. Some cards have no annual fee, while others offer valuable perks like cell phone protection or cash back.
Apply: You can usually apply online or over the phone. Just make sure you go for a card with a lender other than your current debt holder since balance transfers are usually only allowed for new customers (as a way to attract new business).
Initiate the transfer: Make sure to double-check that you’ll be able to transfer your whole debt since some lenders place dollar limits on their transfers. You don’t want to be caught by surprise when $1,400 of your debt is still racking up interest on your old card.
Maintain the old card: Don’t assume that the balance transfer will go through immediately. Make sure you keep up with your payments on your previous card until you see that your balance (and any transfer fee) has been moved to the new one.
Pay off the new card: After the transfer, take full advantage of your 0% interest period. If you’re currently splitting your savings between investing and debt-paydown, it might be a good idea to focus everything on eliminating your debt before the interest resumes.
Pro tip: Almost all credit card balance transfer offers charge a balance transfer fee. This fee can be as high as 5% of the total debt transferred. There may be a minimum charge, so keep this in mind if you have multiple small debts to transfer. Be sure to read the fine print on any card offer, and use a good online calculator to determine how much you’ll end up paying in fees.
READ MORE: How to consolidate your credit card debt
What to look for in a new balance transfer card
- Longer introductory APR period
- No penalty apr or fee
- Lower late fees
- No foreign transaction fee
- Rewards program
- Cash back rewards rate
- Bonus offer
- Transfer amount
- Total cost to transfer debt
READ MORE: Easy steps to pay off $10,000 in credit card debt
What happens if you don’t pay off a balance transfer?
Of course, a brief reprieve from interest doesn’t guarantee that you’ll be able to immediately pay off your debt in full, or even that you’ll be able to make all your payments.
Fortunately, if you’re unable to pay off your entire balance during the 0% APR promo period, it’s not the end of the world. Your remaining balance will simply begin to accrue interest at the new lender’s rate.
However, if you’re unable to at least make your minimum payments during the promo period, your lender may cancel the offer and resume charging you interest sooner than you expected.
So make sure you read your card agreement thoroughly to find out:
- Your interest rate on the balance transferred once the introductory offer ends
- How many payments you can miss before you lose the 0% APR
How much can I save with a 0% balance transfer?
To calculate how much you can save with any balance transfer, you’ll need to track down the following:
- Your balance transfer costs
- The new card’s annual fee
- Your foregone interest expense
Here’s an example:
Imagine that you have a credit card debt of $5,000 that’s currently accruing interest at 20% APR. If you could put $250 each month toward paying it down, it would take you 25 months to become debt-free. Over that period, you’d pay $1,133 in interest.
If you could qualify for a 0% balance transfer card that stopped your interest accrual for 18 months, you’d be able to pay off $4,500 of that debt during the promo period, leaving just $500 left over. You’d be able to pay off the remaining balance in just a few months, paying only about $12 in interest.
If your balance transfer fee was 3% ($150 in this case) and the annual fee on the new card was $60, you’d still save a total of $911.
READ MORE: Debt consolidation loans for bad credit borrowers
Do balance transfers hurt your credit score?
Balance transfers don’t have a direct impact on your credit score, but they do affect a few other factors that might.
First, whenever you apply for new credit, a lender will perform a hard inquiry to check your credit. This might lower your score by a few points since recent credit activity plays a small part in the calculation. The good news is that your score should bounce back from a hard credit inquiry pretty quickly.
Second, if you get approved for the new card, it will have a positive impact on your credit utilization rate, which plays a large role in your score. Your utilization rate is your debt divided by your total credit limit. In general, your score will go up the more credit you have available but unused.
Pro tip: Be sure to leave your existing credit card open even after the transfer goes through. Not only will this help out your credit utilization ratio, but it will also avoid reducing the average age of your credit accounts, which is another key factor in your credit score.
READ MORE: 15 ways to build credit without a credit card
Is a 0% balance transfer a good idea?
At the end of the day, a balance transfer is all about cost savings. If you have the score to qualify for a card and the math works out in your favor, then a balance transfer is probably a good idea. It can definitely speed up repayment.
If your credit score is too low, the cost savings are negligible, or you don’t think you’ll be able to make the payments, then don’t bother. Instead, take a look at some of the other options out there to work toward becoming debt-free.
The bottom line
If your credit score is good, balance transfer credit cards can be an excellent way to consolidate your debts into one monthly payment, and to make some real progress paying down your debt during the interest-free period.
Debt consolidation involves taking your high-interest credit card debt and rolling it into a new loan, whether it’s a personal loan or a balance transfer credit card that you repay throughout the promotional period. The introductory rate on the new credit card can help you put a serious dent in your debt while you aren’t paying interest.
Yes! This can be important because credit unions tend to offer credit cards with the lowest overall APRs. Alliant Credit Union, PenFed, and Navy Federal Credit Union are among those that offer cash back credit cards.
You actually have more than one credit score, but the ranges used by the two most popular (FICO and VantageScore) are the same:
Excellent credit: 800 to 850
Very good credit: 740 to 799
Good credit: 670 to 739
Fair credit: 580 to 669
Poor credit: 300 to 579
To qualify for a balance transfer credit card, you will generally need to have good credit, so a score of 670 or above. You may still be approved if you’re on the higher end of the fair range, though. Learn more about how credit scores are calculated.