This is for existing credit card debt only. For NEW borrowing see 0% Credit Cards
Transferring existing credit card or store card debt to a ‘new card’ with low or 0% interest can save you hundreds or even thousands of dollars. By transferring your balance you can repay the higher interest debt at a cheaper rate.
- 18 months, 0%, no fee Slate from Chase 18 months,
- 0%, 3% fee / Citi Diamond Preferred 18 months
- 0%, 3% fee / Citi Simplicity Card 6 months,
- 1.99%, 2% fee / Iberia Visa Classic Card (average/poor credit)
Typical case study
- Assess Your Old Credit Card Debt: Chase Freedom Visa $3,500 at 12.99%, Macys Store Card $1,500 at 22.99%
- Apply for New Credit Card: Citi Diamond Preferred 0% for 18 months on balance transfers
- Transfer Chase Freedom Visa Card and Debt to Slate From Chase. $3,500 is paid off to Chase Freedom and Macys Card
- New Reality: Chase Freedom Card and Macys Card are debt free because the debt has been transferred to the CitiDiamond Preferred Card; $5,000 at 0% for 18 months.
0% balance transfer fees are for new customers only, and you must transfer the debt within a specific time period (usually 60 days). (If your existing credit card sends you a set of blank checks for a 0% interest rate, you can simply write yourself a check and then pay off your balance on that card. You will pay a transfer fee usually 2 to 3 %). Remember if you want to pay off your debt before the introductory interest rate ends, you must pay more the minimum amount required and you cannot add to the initial debt by charging on it. You do not want to wind up with MORE debt than you started.
Finding the best balance transfer for your needs
You need to evaluate four factors
Best 0% Balance Transfer Cards
You’ll want the 0% card if you can pay off your debt within 18 months or are savvy enough to move your debt around by dating and dumping your cards. (See 0% interest cards for an explanation). It’s important to keep in mind that many cards charge a 3% transfer fee each time debt is added so you should factor that in when transferring debt. You usually can only get the balance transfer deals within the first 60 days of the card.
Since 0% deals now are running as long as 18 months, they’re a better deal than the fixed low interest rate cards even if it takes you more than 18 months to repay (you can date and dump at the end of 18 months). We’ve broken down the deals for you so you can make the best choice.
|Card||Annual Fee||Interest Rates||Rewards Rates||Other Perks|
18 months, 0%, Slate from Chase
|$0||18 months Balance Transfer Intro Rate 0% then 11.99% – 21.99%* variable||None||None|
18 months, 0% Citi Diamond Preferred
|$0||18 months Balance Transfer Intro Rate 0% then 11.99% – 21.99% depending on credit history||None||
18 months, 0% Citi Simplicity Card
|$0||18 months balance transfer Intro rate 0% then 2.99% – 21.99% depending on credit history||None||
6 months, 1.99% Iberia Visa Classic Card
|$0||1.99% for 6 months then either 7.25%, 10.255 or 13.25% depending on credit history||None||None|
Barclay Ring Card
|$0||8% on purchases and transfers||None||None|
The 3% balance transfer fee
You pay a fee to transfer balances to your new card. The fee ranges from 3% to 5% with a minimum of $75. There used to be 0% balance transfer fee offers on the internet but they went the way with economy in 2008. At this time no major issuers could be found with the 0% balance transfer fee or offering anything less than 3%. How much will this really impact you? Well, if you’re transferring $2,500 you would pay $75 on a 3% balance transfer. Paying a one time 3% interest fee is a lot better than paying 20% APR.
Other 0% balance transfer deals
Already have the cards listed above? Here are some others to consider.
Don’t look the junk mail gift in the mouth
Chances are if you have good credit, the 0% offers will come rolling in with the mail delivery. You can apply for these new cards via snail mail or internet. The other thing to watch out for are the 0% interest blank checks that your credit cards send you. You can write yourself a check, deposit it and then pay your credit card. The best thing about this deal is that you don’t have to apply for a new credit card.
Best buys for fair credit
Let’s face it, not everyone (especially after the latest recession) has excellent credit. You can still get the 0% offers the only drawback is that they won’t be for as long as if you had excellent credit. (Average offers are a year instead of 18 months). So if you do decide to take a 0% offer, you must be diligent about when the end date is up for the interest, otherwise you will be paying close to 29.9%. Here are some good offers for those with fair credit.
|Card||Annual Fee||Interest Rates||Rewards Rates||Other Perks|
Capital One® Cash Rewards
0% For the first 12 months
19.8% APR on Balance Transfers and Purchases 24.9% APR on Cash Advances
|1% cash back on all purchases||None|
NFL Extra Points Credit Card
|$25 Annual fee with 4% Balance transfer fee||
0% Intro APR on balance transfers and purchases for the first 12 months after account opening,
|Redeem points for merchandise, once-in-a-lifetime experiences, game tickets, or 1% cash back statement credits||20% off every purchase at NFLShop.com – that’s $20 off every $100 you spen|
What to do if you have poor credit?
If you have poor credit you are most likely not going to get the 0% balance transfer deal. You can build up your credit score by applying for these cards to help you rebuild and re-establish your credit. Note, however, most of these cards require a deposit and a monthly fee. The upside is, they report regularly to 3 major credit bureaus and offer automatic approval.
Credit Card Insurance: Is it a Scam?
Credit card insurance insures that if you lose your job or become disabled, your monthly bill will be covered. It usually lasts for a year and it seems like a great idea until you really look at the fine print.
For around $80 a month, it will cover $10,000 in payments. However, if you are self-employed, you will not be covered. Even if your job is covered, you rarely receive what you put in. According to the United States’ General Accountability Office such insurance rarely pays off, “cardholders received 21 cents in tangible financial benefits for every dollar spent.” If you can get insurance it will only cover basic payments and in the long run you will be paying more as your interest compounds.
If you have a high balance on your card and are concerned that you might be laid off and still want the insurance, then read the fine print and do not trust the person on the other end of the line trying to sell it to you.
One thing you might want to do, is create your own insurance policy. So if the credit card insurance costs $80 a month, you put aside that amount into an emergency savings account which you don’t touch. If you in fact lose your job you’ll have a cushion to leverage against.
If you want to pay off your debt, don’t use the card for new purchases. If you do, you will wind up with more debt than you originally started.