Introduction to Balance Transfer Cards
Balance transfer cards are a type of credit card that allow you to transfer your existing credit card debt to a new card with a lower interest rate. This can help you save money on interest and pay off your debt faster. These cards typically come with an introductory period of 0% APR, during which you won’t be charged any interest on your transferred balance. However, it’s important to note that there is usually a fee associated with balance transfers, typically around 3% of the amount transferred.
When choosing a balance transfer card, it’s important to consider the length of the introductory period, the ongoing APR after the introductory period ends, and any fees associated with the card. You should also consider the credit limit on the card and whether it will be enough to accommodate your transferred balance. Additionally, make sure to read the terms and conditions carefully to understand any limitations or restrictions that may apply.
Top Balance Transfer Cards for 2021
1. Citi Simplicity Card – The Citi Simplicity Card offers an introductory 0% APR on balance transfers for 21 months, one of the longest introductory periods available. There is no annual fee, and the ongoing APR after the introductory period ends is 14.74% – 24.74% variable. This card is a great option for those looking to pay off their debt over a longer period of time.
2. Chase Freedom Unlimited – The Chase Freedom Unlimited card offers an introductory 0% APR on balance transfers for 15 months. There is no annual fee, and the ongoing APR after the introductory period ends is 14.99% – 23.74% variable. This card also offers cash back rewards on purchases, making it a good option for those looking to earn rewards while paying off their debt.
3. Discover it Cash Back – The Discover it Cash Back card offers an introductory 0% APR on balance transfers for 18 months. There is no annual fee, and the ongoing APR after the introductory period ends is 11.99% – 22.99% variable. This card also offers cash back rewards on purchases, with rotating bonus categories each quarter.
How to Choose the Best Balance Transfer Card for You
When choosing a balance transfer card, it’s important to consider your individual financial situation and goals. Here are some factors to consider when choosing the best card for you:
1. Length of Introductory Period – If you need more time to pay off your debt, look for a card with a longer introductory period. However, keep in mind that cards with longer introductory periods may come with higher fees or a higher ongoing APR.
2. Ongoing APR – Consider the ongoing APR after the introductory period ends. If you think you’ll need more time to pay off your debt, choose a card with a lower ongoing APR to minimize interest charges.
3. Fees – Look at any fees associated with the card, including balance transfer fees and annual fees. Calculate how much these fees will cost you compared to the potential savings on interest.
Benefits of Using a Balance Transfer Card
Using a balance transfer card can have several benefits, including:
1. Save Money on Interest – By transferring your balance to a card with a lower interest rate, you can save money on interest charges and pay off your debt faster.
2. Simplify Your Payments – Consolidating your debt onto one card can make it easier to manage your payments and stay organized.
3. Improve Your Credit Score – Paying off your debt with a balance transfer card can help improve your credit score by reducing your overall debt load and lowering your credit utilization ratio.
Common Mistakes to Avoid When Using a Balance Transfer Card
While balance transfer cards can be a useful tool for managing debt, there are some common mistakes to avoid:
1. Not Paying Off the Balance in Full Before the Introductory Period Ends – If you don’t pay off your balance in full before the introductory period ends, you could be charged a high interest rate on the remaining balance.
2. Making New Purchases on the Card – Avoid making new purchases on a balance transfer card, as these purchases may accrue interest at a higher rate than the transferred balance.
3. Closing the Old Account – Keep your old account open after transferring the balance to maintain your credit history and credit utilization ratio.
Conclusion
Balance transfer cards can be a valuable tool for managing and paying off credit card debt. By choosing a card with a long introductory period and a low ongoing APR, you can save money on interest and pay off your debt faster. It’s important to carefully consider the terms and conditions of the card, as well as your own financial situation and goals, when choosing the best balance transfer card for you. By avoiding common mistakes and using the card responsibly, you can take control of your debt and work towards a more secure financial future.