The following guidelines must be adhered to to succeed in the points and miles game: It is forbidden for you to have credit card debt. While discussing all of the best travel rewards credit cards and the alluring welcome bonuses that accompany them, this is the one thing we strive to preach about.
However, what happens if there is a balance on a card that you now have? Let’s discuss balance transfers in the situation. The moniker essentially sums it up: A financial instrument called a balance transfer lets you transfer money across credit cards, usually to pay less interest each month and lower your monthly payment. The majority of banks feature credit cards with welcome offers that include a zero percent annual percentage rate (APR) on balance transfers as well as purchases.
These 0% intro APR welcome offers can be just as valuable—if not more so—to someone who is currently drowning in credit card debt, even though we spend most of our time daydreaming about large points and mile sign-up bonuses that facilitate our travels. With such a low-interest rate, you can pay off your balance more quickly because you won’t be charged any additional interest for a while.
Let’s examine balance transfers in more detail and consider some of the top new cards that may be used to complete them.
Benefits of Transferring Balances
An increasing number of people in America are drowning in credit card debt, as many cards have annual percentage rates (APRs) close to 30%. Sometimes you feel so powerless. The high-interest rate on your credit card can make it difficult to pay off any remaining balance, even if you are making the minimum payment required by the card each month.
As an example, let’s look at a person who has a $10,000 credit card bill at a 20% interest rate. That’s conservative given how high-interest rates have become and shows how high-interest credit card debt can strain your monthly budget. In this case, you would spend approximately $650 every month on your credit card and incur interest of about $1,650 if you were to pay off the $10,000 balance over the next 18 months.
Alternatively, you could transfer that $10,000 balance to a new credit card and pay only roughly $550 a month to pay it off completely in the same 18 months if you did so. This credit card offers 0% introductory APR for balance transfers. Your monthly payment would be almost $100 less if you were not responsible for the bank’s exorbitant interest rates.
The Finest Cards to Finish a Transfer of Balance
Choose credit cards with low introductory APRs while you’re shopping for a new card to transfer your current balance to. In this instance, anything above the 0% introductory APR offers offered by several reliable credit cards isn’t worth it.
A card from a different bank than the one you now owe money on should also be on your list of priorities. Banks typically prohibit you from transferring balances between their cards to benefit from promotional balance transfer offers. They just have no financial motivation to keep you on the hook at a high-interest rate once they’ve had you.
Selecting a credit card that will meet your long-term needs is just as crucial as obtaining a low introductory APR. It would be fantastic to be able to use the card to earn incentives for new purchases when the balance is paid off, and then pay the entire amount each month to avoid paying that exorbitant interest. An extra perk would be obtaining a credit card that offers strong incentives and advantages for your further purchases.
Consider the duration of the offer before choosing the card that would work best for completing a balance transfer; the longer the deal, the better. Your monthly payment amount will be reduced as a result of having a longer time to pay off the loan at 0% APR. Additionally, take into account any penalties that the card may impose, such as late fees, yearly fees, or balance transfer fees. When it comes to balance transfers, most banks provide introductory rates of 3%, but you’ll want to transfer your balance as soon as you can because those rates frequently increase to 5% after a few months. The ideal option for you will be to combine a cheap transfer charge with an intro APR that is longer term.
Citi Simplicity® Credit Card
- Initial transfer of balances APR: On Balance Transfer, there is a 0% intro APR for 21 months.
- Purchases made initially Interest Rate: 0% 12-month period for purchases for Citi Simplicity® Credit Card
- Normal APR: 19.24% to 29.99 (Variable)
- Five dollars (or three percent of the transfer amount, whichever is higher) is the first fee for balance transfers that are finished within four months of the account establishment.
- After the introductory time, there will be a regular balance transfer cost of $5 or 5% of the transfer amount, whichever is higher.
- Welcome bonus: Absent
- Reward: None
- Annual cost: $0
Citi Double Cash® Card
- Initial transfer of balances Interest rate: 0% for 18 months
- Purchases made initially APR not provided
- Normal APR: 19.24% to 29.24% (Variable)
- Five dollars (or three percent of the transfer amount, whichever is higher) is the first fee for balance transfers that are finished within four months of the account establishment.
After the introductory time, there will be a regular balance transfer cost of $5 or 5% of the transfer amount, whichever is higher for Citi Double Cash® Card. - Benefits of signing up: Spend $1,500 during the first six months of opening an account to receive $200 in cash back. You can redeem 20,000 ThankYou® Points (worth $200 cash back) as the bonus offer fulfillment.
- Awards: Get 2% cash back on every transaction, with 1% awarded at the time of purchase and another 1% when you make a payment.
Annual cost: $0
Chase Freedom Unlimited®
- Initial transfer of balances 15-month intro APR of 0% is available for balance transfers.
- Purchases made initially introductory 15-month APR of 0% on purchases
- Typical APR: 20.49% to 29.24%. Differential
- Five dollars will be charged as an initial balance transfer fee for balance transfers that are finished within 60 days of account opening, or three percent of the transfer amount, whichever is higher.
- After the introductory time, there will be a regular balance transfer cost of $5 or 5% of the transfer amount, whichever is higher.
- Welcome bonus: Get up to $300 in cash back by earning an additional 1.5% on all of your purchases, up to a maximum of $20,000 in the first year. 6.5% is awarded for trips booked using Chase Ultimate Rewards®, 4.5% is awarded for eating out and pharmacy purchases and 3% is awarded for all other transactions.
- Benefits include 3% cash back on eating (including takeout and qualified delivery services), 5% cash back on Lyft purchases, 5% cash back on travel purchases made through the Chase Travel site, and limitless 1.5% cash back on all other transactions.
- Annual cost: $0
Does the same bank allow me to transfer my balance?
Negative. Although it’s not illegal, it’s rare to find a bank that will let you transfer money from one of their credit cards to another so you may benefit from a promotional interest rate.
The explanation is straightforward: Promotional interest rates are being used by banks to entice new customers, much like the eye-popping welcome bonuses we see on the best travel rewards credit cards. If you already owe money on one of their cards, they are profiting from you and are not financially motivated to let you transfer that sum to a new card at a reduced interest rate.
My Card: What Happens?
You shouldn’t have any more payments to make on your old card once you’ve transferred your balance to your new one, provided you transferred the entire amount. As a general rule, it’s wise to keep that card open to improve both the average age of your accounts and your total credit use. It is also possible to cancel the card if it has an annual fee or if it is no longer necessary for you.