Used wisely, balance transfer credit cards can be used to eliminate credit card debt without paying a dime in interest, fees, or other finance charges. After reading the fine print of many of the industry's leading cards, we at The Motley Fool have discovered some particularly attractive cards for people who want to pay down credit card debt.
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The three cards below are some of the best picks in balance transfer cards because they have lengthy 0% introductory periods on balance transfers. Two cards even waive balance transfer fees on qualifying transfers.
Here are our top picks in balance transfer cards.
1. A card for slashing debt
This card was designed with debt destruction in mind. The Chase Slate card offers a 0% introductory period on purchases and balance transfers for 15 months, and doesn't charge a balance transfer fee on transfers in the first 60 days after approval.After that, the card carries a balance transfer fee of $5, or 5% of the balance, whichever is greater, which is relatively high compared to competing cards. For this reason, balances should be transferred during the zero-fee, 60-day introductory period.
Cardholders who use this card thoughtfully can save hundreds of dollars in interest charges. The table below reflects the potential savings by transferring $5,000 from a card with a standard annual percentage rate (APR) of 18% per year.
Source: Calculations by author.
This card is best for people who want an interest- and fee-free way to eliminate their credit card debt during its 15-month 0% introductory APR period for balance transfers. That said, it's most powerful when balances are transferred within the first 60 days after approval to avoid its standard balance transfer fee. Learn more from our full review of Chase Slate.
Save on fees and interest with these top balance transfer credit cards. Image source: Getty Images.
2. The longest balance transfer period on the market
Citi Simplicity is a unique card. It offers a 0% introductory APR on purchases and balance transfers for an eye-popping 21 months, and waives fees for late payments, giving forgetful customers some leeway. (Although late fees are waived, failing to make payments on time can be devastating to your credit score.)
There is some fine print to keep in mind. Balance transfers carry a fee of $5 or 3%, whichever is greater, and balance transfers must be completed within four months to qualify for the introductory 0% interest rate. That said, the card's balance transfer fee is more than fair, given that it has the longest 0% introductory period of any credit card. (Citi is a standout star in the balance transfer card category.)
Source: Calculations by author.
The card is best suited for people who need more than 15 months to pay down their balances. Cardholders who can pay off their balances in just 15 months would be better suited for Chase Slate, given that it doesn't charge a balance transfer fee on amounts transferred in the first 60 days. Otherwise, Citi Simplicity might be a better choice for people who will make full use of its lengthy 21-month, 0% introductory period on balance transfers. Learn more from the full review of Citi Simplicity.
3. A low APR card
TheBarclaycard Ring Mastercard is another card designed with debt reduction in mind. The card offers a 0% introductory APR on purchases during the first 15 months, plus a 0% introductory APR on balance transfers that are completed within the first 45 days after approval.
The biggest perk of this card is that it doesn't charge a balance transfer fee, and it has one of the lowest ongoing APRs of any credit card, recently just 13.74%, making it a better fit for people who are likely to carry balances in the future.
Source: Calculations by author.
Barclaycard Ring Mastercard has the lowest standard APR of the cards on this list, besting the lowest rates offered by Chase Slate and Citi Simplicity by 2 percentage points and 1 percentage point, respectively (variable rates of 13.74% vs. 15.74% and 14.74%, respectively).
That said, the benefit of a lower standard APR only comes into play when cardholders expect to carry a balance after the 0% introductory period, so the advantage is nonexistent for those who plan to pay off their balances once and for all during the 0% introductory period. This card ranks slightly lower on this list due to the fact it's designed for cardholders with "excellent" credit, and may be more selective than Chase Slate and Citi Simplicity, which only require "good" credit. Learn more from our full review of Barclay Ring Mastercard.
A warning on balance transfer cards
Introductory balance transfer rates are just that -- introductory. After the intro period expires, the balances will revert to a standard rate, which can range from 13% up to 20%, and more. For this reason, balance transfer offers make most sense for people who are serious about paying down their balances quickly.
Some balance transfer offers can become a financial trap when the same card is also used to make purchases. Keep in mind that the law only requires payments in excess of the minimum monthly payment to go toward the higher interest rate balance.
For example: Cardholders who have an $8,000 balance transfer balance at a 0% APR and a $3,000 purchase balance at an 18% APR would see their monthly minimum payment applied to the 0% APR balance. Only amounts above the minimum payment would be applied to the higher 18% APR balance.
This can become a very big problem, as minimum payments reduce the 0% balance, while the 18% APR balance is left to compound with each passing statement period.This shouldn't be a problem for people who sign up for the three cards above and immediately transfer their balances, as each card has an introductory period for purchases equal to, or longer than, the introductory period on balance transfers.
Save yourself some confusion byhaving a card you use only for purchases, and pay it in full each month. The card you use for balance transfers can be left in your sock drawer and never used for purchases so as to avoid a situation in which a card has two different types of balances at two different interest rates.
It's not the most refined solution, but it's a sure-fire way to ensure you get the full benefit of any introductory balance transfer rate.
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