How to Choose the Best Credit Card for Balance Transfers

If you carry a balance on a high interest credit card, you may occasionally ask yourself where your money is going. Even though you diligently make payments every month, one day you realize that it may take years to pay off your debt because so much of the payment is going toward interest charges.

Then you remember you’ve heard about something called a balance transfer and how it can help you pay off your debt faster. Transferring a balance to a low-interest card can be a great way to tackle overwhelming debt. However, despite the apparent simplicity, choosing a balance transfer credit card is not always so straightforward. You’ll probably want to consider several factors, including your short- and long-term goals.

When and why to consider balance transfers

Many people transfer their high-interest balances for one reason—to save on interest, thanks to the proliferation of balance transfer credit card offers with low introductory interest rates.

However, there are other reasons why balance transfers can make good sense.

Consider credit card fees

• Balance transfer fees: Even though you may get a lower introductory annual percentage rate (APR), it doesn’t mean the service is completely free. In most cases, you will have to pay a 3-5 percent balance transfer fee. Of course, the smaller the fee, the better.
• Annual fee: Your balance transfer card might carry an annual fee. Research any fees associated with a credit card offer and consider a balance transfer card with no annual fee.

Consider credit card interest rates

Introductory APR for balance transfers: The duration of an introductory APR on balance transfers varies by credit card, and your APR will increase as soon as the intro period is over. If you take advantage of a low introductory offer on balance transfers, it’s ideal to have a longer intro period to allow more time to pay down your debt.

• Introductory APR for purchases:  Everyday purchases on cards with a promotional balance transfer APR are still subject to a standard purchase APR unless there is an introductory APR for purchases. When shopping for the best credit card for your transfer balance, you may want to choose a card with an introductory APR for both the transferred balance and purchases.
• Standard APR: After the introductory offers expire on your credit card, a standard APR applies to the unpaid transfer and purchase balances. And your standard APR applies to any new transfers or purchases moving forward. If you want to pay down your debt, a good goal is to pay it off within the introductory period before the standard APR applies.

Limit your balance transfers

Don’t count on being able to repeatedly roll over debt using multiple balance transfer offers, as over-utilizing credit could lower your credit score and make you less likely to qualify for another balance transfer offer.

In addition, you’ll pay balance transfer fees for each transfer. While 3 percent may not sound like much, you would pay $300 for transferring $10,000. While it can be better than paying off your balance over time on a higher interest rate card, there is a cost.