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Balance transfer credit cards are a great way to pay off credit card debt. Sounds confusing? It’s not actually. What happens is you get to transfer all of your existing debt from a high-interest card to a low-interest card.
Since you’re charged with a lower interest rate, you will now have extra cash to pay off the rest of your debt. In addition, some cards even offer bonus perks that will help you pay off your debt faster and with more flexibility.
Picking The Right Balance Transfer Credit Cards
Balance transfer credit cards come with different features. In fact, these features should be your basis for choosing a card that will suit your needs.
1. Lengthy 0% or low Intro APR – Pick a card that offers low or 0% intro APR for a long period of time so you can remove a huge amount of debt on your accounts. Most cards offer intro periods for balance transfers that last between 12-24 months before the rate goes back to normal.
2. Zero Balance Transfer Fees – Balance transfer fees can range between 3%-5%. Consider getting a card that doesn’t have them or at least lower than the typical rates. However, the only downside with cards that have zero transfer fees is they don’t usually have bonus rewards
3. Zero Annual Fees – Annual fees can range between $100-$500. Choosing a card with zero fees can help you save money in the long run5
4. Perks & Rewards – Does the card offer travel credit, high cashback rates or welcome bonuses? These are things you should also consider.
5. Low Ongoing APR – Picking a card with ongoing rates below 10.99% is ideal. However, most cards with low ongoing APR either don’t have rewards or 0% intro periods, so it’s really up to you to decide what’s important to you.
Top 5 Balance Transfer Credit Cards
Take note that not all cards can have all of five features, but it’s very important that the card you’ll choose would at least have two of them. We’ve analyzed a couple of great balance transfer cards and came decided that these cards below belong to our top five list.
Wells Fargo Cash Wise Visa
The Wells Fargo Cash Wise Visa card gives you a decent 0% intro APR on purchases and qualifying balance transfers within a 15-month period. The ongoing APR is 13.99%-25.99% (Variable).
It has a zero annual fee and a 3% foreign transaction fee. The balance transfer fees are 3% or $5 per transaction (whichever is higher) and transfers should be done within 120 days.
The basic cashback rate is 1.5% on all purchases. However, you’ll get a special 1.8% cashback rate within the first 12 months on eligible purchases made through Google Pay, Apple Pay or other digital wallets.
You’re also entitled to get a $150 welcome bonus if you spend $500 within three months of getting the card. In addition, if you use your credit card to pay for your cellular bill, you’ll have insurance coverage on your phone of up to $600.
Citi Double Cash
The Citi Double Cash card has a 0% intro APR on purchases and balance transfers within an 18-month period. The ongoing APR of 13.99% – 23.99% (Variable).
The card has a zero annual fee and a 3% foreign transaction fee. The balance transfer fees are at 3% or $5 per transaction (whichever is higher).
As for the rewards, you’ll earn 1% cashback on all spending and an additional 1% cashback if you pay the minimum dues on your monthly bill. It’s a total of 2% cashback if you use your credit card responsibly.
The Simmons Visa card does not have a 0% intro period, but what makes it a great balance transfer card is the 9.25% ongoing APR (Variable).
The card has a 2% foreign transaction fee but you’ll pay zero dollars on both balance transfers and annual fees. This card is basically for people who just want to pay off their debt and don’t care about rewards and perks.
Citi Diamond Preferred
Cardholders can avail 0% intro balance APR for 21 months provided that the transfers are done in the first four months. Meanwhile, the 0% intro purchase APR is 12 months. The ongoing APR for both purchases and balance transfers is 13.74% – 23.74% (Variable).
The card has zero annual fees but has a 3% foreign transaction fee on top of purchases. The balance transfer fee is 5% or $5 per transfer (whichever is greater).
The downside of the Citi Diamond Preferred card is it’s not a rewards card, but you do get special access to tickets for concerts and sporting events.
ABOC Platinum Rewards Mastercard
The ABOC Platinum Rewards Mastercard offers a 0% intro balance APR for 18 months and a 0% intro purchase APR for 12 months. The ongoing APR for all transactions is 14.40% – 24.40% (Variable).
There are no annual fees and foreign transaction fees. The balance transfer fee is 3% or $5 per transaction (whichever is greater).
Once you get your card, make sure to spend $1,200 within the first 90 days to get a $150 statement credit.
The card has a cashback category that rotates every quarter on travel, dining, and home purchases. You’ll earn 5 points per $1 spent on these categories with a $1,500 spending limit per quarter.
Meanwhile, you’ll earn 1 point per $1 if you go beyond the spending limit or spend on purchases not included in the cashback categories.
Why You Should Get Balance Transfer Cards
- Flexible payment terms
- More savings
- Simplifies your debt by transferring all your debt into one card
Why You Should NOT Get Balance Transfer Cards
- There are balance transfer fees
- Balance transfers have limits depending on your credit
- Most cards require people who have good to excellent credit
Thoughts From Points Panda
Generally speaking, cards with 0% intro APR with low ongoing rates are recommended, but as we said, sometimes a card doesn’t have all the features. It’s best to focus on the feature that suits your needs.
Personal loans are also an alternative for balance transfers. It has the same function which is to pay off existing debt, but there are a few differences. For example, personal loans can offer bigger amounts with payment periods that extend to more than 24 months. However, they tend to have bigger interest rates too.
If you think you can pay off your loans within a 24-month period at a 0% intro APR rate, just get a balance transfer credit card.
When choosing between a personal loan and a balance transfer, you should consider the amount of debt you have and your ability to pay the loan.
Things To Avoid When Getting Balance Transfer Credit Cards
If you’ve decided to get a balance transfer card, do remember that you need to be a responsible cardholder too. Here are some tips on how to properly use your new card.
- Do not incur additional debt on your new card – The purpose of the new card is to pay the existing debt so only use your card for emergencies.
- Take advantage of the intro periods – Pay as much debt as you can during the low or 0% intro APR so you’ll incur fewer interest charges when the rate goes back to normal.
- Do not miss payments – Just pay everything on time so you won’t incur additional charges and eventually get bad credit.
It’s important to determine the root of your financial problems to figure out which credit card works best for you. Do you simply want to pay off your debt or do you want extra benefits too?