How To Compare Credit Card Balance Transfer Offers

A credit card balance transfer involves transferring debt from one credit card to another, typically to secure a lower interest rate. Many people use balance transfers to save money on high interest rates. But not every balance transfer is good. Some have hidden costs that can cause more trouble. The main idea is simple. When comparing offers, always consider what each card offers and what it takes away. Some cards offer 0% interest for a limited period. Some have low fees. Some charge high fees but hide them in the fine print.

One thing to check is the introductory APR. APR means Annual Percentage Rate. Some balance transfer credit cards give 0% APR for 12 to 21 months. This is good because every dollar paid goes toward the debt, not the bank’s pockets.

But read the small print. When the promo ends, the APR jumps. If the balance is not paid in full by then, interest can accumulate quickly. Compare cards with longer 0% periods, but also consider the regular APR after that period to ensure it is not too high.

A good source to learn more about how APR works is the Consumer Financial Protection Bureau .

Most balance transfer cards charge a fee. This fee typically ranges from 3% to 5% of the total amount transferred. For example, moving $5,000 could mean paying $150 to $250 just for the transfer.

A card with no balance transfer fee can save money if the rate and other terms are still reasonable. However, sometimes cards with no fee have a shorter 0% APR period or a higher interest rate after the promotional period ends. Always do the math to see if paying a small fee is worth it for more time at 0% interest.

Some people focus only on the promo rate and forget the regular rate. This is a mistake. If the debt is not paid off before the promotion ends, the regular APR applies. This rate can be 15% to 25% or even higher.

Select a card with a fair, regular APR, just in case the debt is not cleared on time. It can help keep interest costs down.

For up-to-date average credit card rates, visit Bankrate .

A balance transfer card should be simple. Fancy rewards, such as points or cash back, sound nice, but they can encourage people to spend more than necessary. It is better to focus on paying off the balance than earning rewards that encourage new debt.

Also, check how much of the credit limit can be used for the transfer. Some cards have limits that are lower than the total credit line.

Sometimes a card must be used within a specific time frame to receive the promo. For example, a bank may stipulate that the transfer must be made within the first 60 days. Miss that, and the offer is gone.

Applying for a new balance transfer card means a credit check. This can initially lower a credit score slightly. However, transferring debt to a new card can be beneficial in the long run if it reduces the total balance on old cards and the new card is used wisely.

Keeping old cards open can also help. Closing old cards can lower the credit age and potentially harm your score. However, never spend more on the old cards, or the debt will continue to grow.

The Federal Trade Commission  has more tips about how credit scores work.

Many balance transfer cards offer a 0% APR for balance transfers only. New purchases may not get the same rate. Interest on new purchases can accumulate if not paid in full each month.

Check if the card also offers 0% APR on new purchases or only on balance transfers. It is safer to stop using the card for new spending until the debt is paid.

Never rush to apply for a balance transfer card. Read every rule and fee. Look for words like "deferred interest." If the balance is not paid on time, interest may be charged from the first day. That can be a costly surprise.

Use a calculator to add up how much will be saved by moving the balance. If the savings are bigger than the fees, the offer can be a good move.

A balance transfer is a tool. It is not free money. The goal is to pay off debt more quickly and affordably, rather than just transferring it. Make a plan to pay off the full amount before the promo ends. Set a monthly target payment that will clear the debt on time.

People who stick to the plan often find that they save hundreds or thousands of dollars in interest.

Consumer Financial Protection Bureau

Bankrate

Federal Trade Commission