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Balance Transfer Cards for Fair, Average or Excellent Credit

This article was written by in Credit, Debt Reduction. 2 comments.

[Editorial note: This offer was last updated on July 13, 2016.]

Are you still wrestling down holiday debt?

Zero-interest balance transfer credit card offers can help you meet this challenge, but only if you know what to look for. Otherwise, you will end up paying interest anyway, which is exactly what the credit card companies hope will happen.

Time to pay the piper

According to a Consumerism Commentary analysis of Federal Reserve figures, since 1989, Americans accumulated an average of nearly $30.3 billion in new credit card debt in the final three months of the year. In the first three months, they paid down an average of $24.1 billion in credit card debt.

Chart depicting rise in revolving consumer credit from 1989 to 2014

Click on the image to the left, and you can see that Americans run up more holiday debt than they repay after New Year’s Day.

This problem is made worse by the fact that they also run up debt in the second and third quarters of the year.

As a result, credit card debt increased four-fold over those 25 years, to nearly $890 billion.

Balance transfer credit cards – what to look for

What adds to this problem is that the debt accumulates interest, often at high rates. Zero-interest balance transfer credit cards can help, by buying you some time to pay off your debt without interest. However, it is important to know what to look for when considering an offer:

  1. Does the offer apply to your credit profile? Credit card companies advertise their most attractive terms, but these only apply to the most attractive customers – those with strong credit ratings.
For example, a current offer being marketed by Chase Slate can help a consumer save with a $0 introductory balance transfer fee, a 0% APR for 15 months on purchases and balance transfers, and a $0 annual fee. (Chase Slate) That’s over a year of 0% APR for balances transferred within the first 60 days — but the cream of the crop of balance transfer offers are only available to those with great credit. If your score is above 740, you are considered to have prime credit and can probably choose from any offer that’s out there. At the other end of the spectrum, if your credit score is below 620, you are considered sub-prime and probably won’t get the best credit card terms.
  1. How long does the zero interest offer last? These offers are temporary, so compare to see which ones give you the longest interest-free period. Those periods can range from a few months to over a year, so it does make a big difference.
People assume that, when the time expires, they can always roll any remaining balance into a new zero-interest balance transfer credit card, but opening new accounts frequently can damage your credit rating. Ultimately, this could make new zero-interest offers unavailable to you.
  1. What is the interest rate after the initial period? Chances are you will incur interest charges eventually, either on the unpaid portion of your transferred balance or on new purchases. So, it is important to compare rates you would be paying after the zero-interest period runs out.
  1. Is there a fee for transfers? Keep in mind that these fees, which are often 3% – 5% of any transferring balance, will reduce the savings of the zero-interest period. Compare to see which cards have low transfer fees.
As mentioned above, Chase Slate® is one notable example of a card that is offering a $0 introductory balance transfer fee, a 0% introductory APR for 15 months on purchases and balance transfers, and a $0 annual fee as a part of its introductory offer.
  1. What is the credit limit? Make sure the limit is high enough to allow you to consolidate your existing credit card debt, or at least a meaningful portion of it.

The ultimate question: What is your repayment plan?

After you’ve asked all the right questions about different credit card offers, you have to ask yourself one very important question: What is your plan for paying down that debt? You need a budget with a payment plan that lets you project how long it will take you to pay off your credit card balances, preferably before any zero-interest offers run out.

One way or another, the build-up of debt is a problem that won’t be solved by simply moving it around. The best balance transfer credit card offers can help you pay off your debt less expensively with zero interest, but the clear goal must be to pay off that debt completely.

Updated August 19, 2016 and originally published January 5, 2016. If you enjoyed this article receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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{ 2 comments… read them below or add one }

avatar 1 Anonymous

I think when you are sure you can pay your credit card debt off and wont accumulate more, this can be a great help, I had unexpected medical expenses not covered by insurance, and the extra time gave me some breathing room to pay off. You have to watch out for the balance transfer fees. The Slate offer seems like a great one – no annual fee, no balance transfer fees, and 0% apr for 15 months. You don’t see many offers like those these days.

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avatar 2 Anonymous

Good advice. And one more thing: When you transfer a balance, make sure you pay attention to your total balance if you keep using both your old and new cards. It can go up fast, which I learned from (painful!) experience years ago.

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