Things to Look Out For When Shopping for Balance Transfer Cards
All credit cards are not created equal – not even close.
You definitely want to pay attention to the terms and conditions of balance transfer offers so that you can find the best card for your needs. Here are common features and what you should be paying attention to.
1. Promotional period, or introductory period, is the period of time in which the promotion is valid. So, if you have a 0% introductory APR offer, that 0% interest doesn’t last forever. It may last 6 months, 12 months, or if you’re lucky, 18 months. The longest one I’ve seen in the U.S. in recent years is 21 months. After that, the regular APR kicks in, which is often quite high. You want to have paid off your debt in full by the end of the promotional period.
Of course, the longer the better, but cards with longer promotional periods often offset the generous promotional period with a high balance transfer fee. They’ve got to get their money somehow!
2. Balance transfer fees are fees that most cards charge in order to do a balance transfer. They usually range from 3-5% of the total amount that you are transferring, which isn’t outrageous, but it’s significant. If you’re transferring $5,000 worth of debt, you could pay an upfront fee of $250. If the fee is less than the amount of interest you’d pay over the course of the promotional period, it’s still worth it.
There are a small handful of cards that have balance transfer offers with no balance transfer fee. These are ideal, but they often have a shorter promotional period. The Chase Slate is considered one of the best balance transfer cards because it incurs no balance transfer fee and has an introductory period of 12 months, which is not the longest, but fairly generous.
3. Transfers between the same issuer are typically not allowed. So you want to apply for a balance transfer card from a bank other than the one where you’re currently carrying debt.
For example, if your debt is on your Citi ThankYou card, don’t apply for the Citi Simplicity balance transfer offer, because the balance transfer will be rejected.