If you knew you could use a credit card to finally get out of debt forever, would you be interested in learning more about it?
The very thing that has cost you thousands in interest could end up being the lifeline that pulls you out of debt.
Whether you overspent for a recent celebration, have struggled to make ends meet due to the bad economy, or just recently had an unexpected emergency, your credit card currently has a balance. And there's one thing we all know about credit card debt: it will cost you a fortune in interest and maintaining high balances on those cards will affect what is a good credit score number for you in the long run!
Wouldn't it be nice to get rid of it once and for all?
If you've decided to get your finances in order — to finally get out of debt! — you want to pay off your credit card balances as quickly as possible. There are three factors that impact this the most:
- Your current credit card interest rate
- Your current credit card balance
- How much money you have to throw at the balance every month
If you're staring a big holiday credit card bill in the face, you can take the strategy of transferring the balance to a 0% APR balance transfer credit card. You won't remove the debt, but you will eliminate the interest for a period of time dictated by the new credit card agreement. During the months of 0% interest, you can throw all of your payment money toward the balance in order to pay it down faster. You can also try using a balance transfer to give you time to build up an emergency fund.
Why We Like It:
- No balance transfer fee — for a limited time: It is incredibly rare to find a credit card that won't charge you to transfer your balance to the card. This mixed with the 0% offer make this an amazing card for helping you get out of debt. Note that the no balance transfer fee only applies to transfers completed within 30 days of opening your account. When you open the account go ahead and transfer your other balances here. After the first 30 days, you will pay the standard balance transfer fee of 3% of the transferred balance or $5, whichever is more.
- 0% APR on balance transfers and purchases for 15 months (up from 12 months!): As mentioned, you're not paying a balance transfer fee and you're also not paying any interest on your balance transfers and purchases for the first 15 months. You're getting over a year free of interest to hammer away at your debt balances — don't waste this chance! (This card used to only offer 12 months of 0% APR; Chase recently increased it to 15 months.)
- No annual fee: You will never pay an annual fee with this card. An annual fee would put a dent in appeal of this card, but you don't have to worry about that.
- Access to Blueprint: Chase offers a fantastic program called Blueprint that will help you pay off your balances and reduce interest. This card comes with free access to the Blueprint program. (See our review of the Blueprint program.)
Why It Might Not Work for You:
- 0% on purchases only for best credit: No matter your credit rating you will get 0% APR on balance transfers. If you great credit, that will also be extended to purchases. If you only have average credit, it will just be on your balance transfer.
- Delaying your balance transfer: If you delay past 30 days to open the account, you'll miss out on the free balance transfer and instead get dinged with a large fee.
- Late fees will kill your debt payoff plan: If you are late on making a payment your interest rate will automatically skyrocket to 29.99%. (Avoid this by setting up automatic payments.) You will also be assessed a late fee of $15 to $35 depending on your current balance. This also kills the purpose of any rewards you have been earning. Getting 1% back on an airline rewards card does not cover those big fees.
- Other fees: You'll pay a $10 (or 3%, whichever is greater) fee for cash advances. You will pay a $35 fee for going over your credit limit. When you transfer your balance you are usually given that amount as a credit line. If you decided to also swipe your credit card to buy something, you might go over the credit limit and get hit with the fee. Avoid this fate by cutting up the card as soon as you get it and just work on paying off the balance.
You're getting 0% interest for 15 months and you won't pay a balance transfer fee in order to get set up. This card gives you a great opportunity to get rid of that credit card debt once and for all. If you can't handle not putting additional purchases on the card you are opening yourself up to the risk of staying in debt. However, if you can handle the situation and simply pay down your balance it is a great choice for getting out of your current high interest rate credit cards.
Another Option to Consider
Need more than 15 months? The Citi Diamond Preferred® Card offers the longest 0% APR introductory offer in the business at 21 months. That's almost two years to pay down your debts with a 0% APR. Imagine how much interest you'll save during those 21 months if you're able to destroy your credit card balances and pay them off for good.
More from GFC, Below
The only caveat with this offer, however, is that you will need to pay a balance transfer fee equal to 3% of your balance. While that's not ideal, the money you save on interest during those extra 6 months can make this card come out ahead of the Chase Slate® card. Which card is best for you depends on how much time you need to pay down your debt, and whether you mind paying a balance transfer fee up front or not.
If you want to browse other 0% APR or balance transfer credit cards, our comprehensive guide offers details on all of the best offers currently available.
7 Signs You’re Ready for a Balance Transfer Card
Balance transfer cards can help you get out of debt if you use them correctly. However, that doesn't mean it's always wise or feasible for everyone to use this method. Using a balance transfer can help you save money, but there are plenty of traps and potholes that could leave you worse off than you were before. Here are 7 signs you might be ready to use a balance transfer credit card:
#1: You have high interest debts.
Balance transfer cards work best for those who hold high-interest debt. This could include credit cards, payday loans, personal loans with high interest rates, and more. Generally speaking, you don’t want to transfer loans like mortgages, car payments, or student loans to a balance transfer card. These types of loans usually carry a lower interest rate that you don't necessarily need to transfer away from.
#2: You have good credit.
To make use of a good balance transfer credit card, you usually need to have a good to excellent credit score. Even though you may have a lot of debt to transfer, the best balance transfer cards aren’t available to those with poor or bad credit. Credit card companies aren’t interested in taking on loans they don’t think you’ll ever pay back. Remember, this is their attempt at securing a profitable new customer. If you're already struggling with credit, you won't fit the profile of their ideal customer.
#3: You’re serious about paying off debt.
Using a balance transfer card with an introductory 0% APR provides an excellent opportunity to get ahead of your debt payments. Of course, this only works if you have made the decision to pay it off quickly. These cards can help you make huge strides toward paying off your principle balance. By eliminating the monthly interest charge, every cent you pay goes straight toward the principle. That can have an enormous effect on your total balance, provided you commit to paying more than the minimum payment on the card.
#4: You feel you can pay off a lot of debt during your card's introductory offer.
The best balance transfer credit cards usually offer an introductory APR of 0%. While it may be tempting to transfer all of your debts to the card, keep in mind these rates eventually expire. When they do, the interest rate could adjust anywhere from about 12-24% APR. If you don’t pay the entire loan off, you’re new rate could mean you’re not saving money at all. In fact, if the balance is large enough, you may have lost ground. Thus, you should only transfer balances you can reasonably pay off within the introductory period.
#5: You're committed to avoiding new debts.
Using a balance transfer card can be a great move, but – if you’re not careful – it can also present a giant financial trap. Before taking advantage of a balance transfer card, you should make sure you’re doing it for the right reasons. Balance transfer cards should be used to help you pay off debt quickly, not tread water. Although transferring balances to a card with 0% interest could provide some temporary breathing room, it is not a good long-term solution to pay off your debt. Worse yet, you should never use your new card as an excuse to pile up more debt! Adding more debt is a disaster waiting to happen. Remember, you’re using the card to get ahead, not fall further behind. Just say “NO!” to new debt.
#6: You have a plan.
In order to make the best use of your new balance transfer card, you need to have a plan for paying it off. Bust out a sheet of paper and start figuring out a strategy right away. All it takes is some really simple math. If your card has an introductory period of 15 months, divide your new balance by 15. This is the minimum amount you’ll need to pay on a monthly basis to eliminate the balance within the intro period. Work that payment into your monthly budget (if you don’t have one, start here) and you’ll be right on track to pay off your card!
#7: You’ve read the fine print.
Before choosing a balance transfer card, it pays to shop around. Not all balance transfer cards are created equal, so doing your research is important. The best cards all provide an introductory period with a 0% APR, but the length of that timeline can vary dramatically. While some are as short as 12 months, others extend all the way to a whopping 21 months. Even more importantly, you need to be aware of any fees associated with your balance transfer. Almost all balance transfer cards charge a balance transfer fee between 3 and 5 percent of the total balance. The exception is the Chase Slate card, which offers no balance transfer fees on balances transferred within the first 60 days. Do your research and choose the card that best suits your needs.
Three things to Remember About Balance Transfers
Once you’re ready to get a balance transfer card, you should keep these important factors in mind:
- Introductory rates don’t last. – Remember, even if you’re transferring your loan balances to a card with a 0% APR rate, those rates don’t last forever. Balance transfer cards use that introductory rate as a teaser to secure your business. Eventually, that 0% rate will readjust. You’ll be better off if you can eliminate your balance before it does.
- Adding new debt erases your gains. – For the best results, use a balance transfer card as a temporary measure to eliminate interest fees and attack your principle balance. Don’t use the card as a way to create breathing room with lower minimum payments. Adding new debt is probably the worst thing you can do. By charging more expenses, you’re destroying the entire purpose of using a balance transfer card in the first place.
- Transferring your debt does not mean you’ve paid it off. – Though it might seem obvious, remember that transferring your debt does not mean you’ve paid it off. You can’t simply transfer the money and forget it. You still owe the balance whether you want to admit it or not. Use the introductory period to make huge gains against the amount you owe. By paying extra toward your balance each month, you’ll maximize the 0% APR period and be able to pay it off much quicker than you would have without the card.