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How a balance transfer credit card can help you pay down debt 

If you have good credit, a balance transfer credit card can help you pay down debt. 

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Contributing Writer at Tally
December 14, 2020

A balance transfer credit card is a specific type of credit card geared specifically to those who want to pay down debt they’ve accumulated on other credit cards. Balance transfer cards often come with promotional APRs, allowing cardholders to pay down debt without collecting interest.

When used correctly, a balance transfer credit card can help you become debt-free. Learn everything you need to know about balance transfer cards, including how they work and who can use them. You’ll also discover some of the best options available today and other debt repayment alternatives. 

What’s a balance transfer credit card

When you move a balance from one credit card to another, you’re completing what’s known as a balance transfer. Some card issuers offer balance transfer cards, which are specifically meant for transferring balances. 

Consider the following facts about balance transfer cards, courtesy of Experian

  • 57% of consumers use a balance transfer card to take advantage of a promotional offer 
  • 35% of consumers use the card to consolidate balances and close high-interest cards 
  • 25% of consumers indicated they used the card to defer card payments 
  • 67% of consumers noted they paid off their entire balance during the promotional period 

One of the biggest perks of balance transfer cards is the introductory APR offer. These cards often have an intro APR of 0% for a pre-defined period of time, usually 12-18 months. After the intro period ends, the card’s regular APR becomes active. 

When you transfer balances from a high-interest credit card to this new card, you can pay down the balance during the introductory period without collecting interest. 

What’s in it for credit card issuers

Let’s say you use your new credit card exclusively to pay down your existing balances and you don’t charge any new purchases on the card. You might wonder how this benefits the card issuer if they’re not collecting any interest charges

The answer is the balance transfer fee. Credit card issuers charge a fee of around 3% to 5% of the total amount of each transfer. This fee is added to your total credit card balance. You won’t have to pay interest on it, so long as you pay it off during the intro period

Chances are the transfer fee is lower than the interest rates on your current credit card (or cards). For instance, compounding interest on a credit card with a 15.99% APR can cost you more in the long-term than a one-time balance transfer fee.

However, it all depends on the balance amount you transfer. Use a balance transfer calculator to determine what makes the most financial sense.

What should I look for in a balance transfer card

There are several factors to keep an eye on when comparing balance transfer credit cards, including: 

  • ​Balance transfer fee: This typically ranges from 3% to 5% of the total amount transferred.
  • Intro APR period: Anything longer than 12 months is ideal. 
  • Promotional rate: Odds are this will be a lower interest rate than your current high-interest credit card. Many balance cards offer 0%, but you’ll need a good to excellent credit score to access these rates. 
  • Annual fee: Most balance transfer cards don’t have annual fees, so steer clear of those that do. 
  • Credit card issuer: You typically can’t transfer a balance between cards with the same issuer. For instance, if you have a Capital One card, you likely can’t transfer the balance to a Capital One balance transfer card

Are there eligibility requirements for balance transfer cards

The eligibility requirements for balance transfer cards depend on the specific card issuer. The cards with the best introductory rates and promo periods are available to those with good credit

A good credit score is a FICO score of 670 or higher or a VantageScore of 660 or better. For reference, a score greater than 780 on either scale is considered excellent. 

What are the best balance transfer credit cards available today? 

Woman researching balance transfer credit card on her laptop

If you’re ready to apply now, you may want to consider the balance transfer cards listed below. Note that these options are for those with good or excellent credit. If you have fair credit, be sure to check out this guide to the best balance transfer cards for fair credit

Citi Diamond Preferred Card 

The Citi Diamond Preferred Card offers a 0% intro APR for the first 18 months on both new purchases and balance transfers. 

  • Recommended credit: Excellent
  • Annual fee: $0 
  • Standard variable APR: 14.74% to 24.74%
  • Sign-up bonus: None 

The balance transfer fee is 3% or $5 of the amount of the transfer, whichever is greater. Other perks include free access to your FICO score, special access to concerts and sporting events through Citi Entertainment, $0 liability protection on unauthorized purchases, and Citi Identity Theft Solutions

Citi Double Cash Card 

The Citi Double Cash Card is unique because it allows you to earn 2$ cash back on all purchases, even if you use the card for balance transfers. However, balance transfers are not eligible for the cash back rewards program. The Intro APR is 0% for 18 months. 

  • Recommended credit: Excellent
  • Annual fee: $0 
  • Standard variable APR: 13.99% to 23.99%
  • Sign-up bonus: None 

The balance transfer fee is 3% or $5 of the amount of the transfer, whichever is greater. All balance transfers must be completed within four months of account opening

U.S. Bank Visa Platinum Card 

The U.S. Bank Visa Platinum Card offers a 0% APR on both purchases and balance transfers for the first 20 billing cycles

  • Recommended credit: Good 
  • Annual fee: $0
  • Standard variable APR: 13.99% to 23.99%
  • Sign-up bonus: None 

If you pay your mobile phone bill on this credit card, you’ll also receive cell phone protection, covering damage and theft. The balance transfer fee is 3% of each transfer amount or $5, whichever is greater. 

Citi Simplicity MasterCard 

The Citi Simplicity Card never charges a late payment fee, nor will it charge a penalty APR. You forgo opportunities like cash rewards on dining experiences, but you’ll maintain a low interest rate even if you miss a payment. 

  • Recommended credit: Good 
  • Annual fee: $0 
  • Standard variable APR: 14.74% to 24.74%, depending on creditworthiness and Citi’s discretion
  • Sign-up bonus: None 

The introductory balance transfer offer for this card is 0% APR for 18 months from the date of first transfer. The balance transfer fee is 3% or $5 of each transfer. 

How can I pay down debt without a balance transfer card

If you don’t qualify for a balance transfer card or don’t want to deal with transferring multiple balances, you have a few other options to pay off your debt. 

Debt avalanche method 

The debt avalanche method focuses on using extra money in your budget toward paying off your credit card with the highest interest rate first. While doing so, you continue to make minimum payments by the due date on your other credit cards. 

Once you pay off the card with the highest interest rate, you then focus on paying off the card with the next-highest rate. You continue to make minimum monthly payments on your other cards. This method reduces the amount you accumulate in long-term interest and is the quickest way to pay off credit card debt

Debt snowball method 

With the debt snowball method, you apply the extra funds in your budget to pay off the credit card with the smallest balance first, regardless of the APR. While doing so, you continue making your minimum monthly payments on your other cards to avoid late fees and penalty APRs. Once you pay off the card with the lowest balance, you move on to paying off the second-lowest balance, and so on. 

This method can cost you more money in the long run since it doesn’t prioritize paying off high-interest debt. However, quickly paying off small balances can give you the motivational boost you need to keep going.

Credit card payoff app 

If your creditworthiness is good but you don’t want to open a new card, consider using a credit card payoff app like Tally. Tally uses the debt avalanche method to pay down your debt efficiently. 

Tally

With Tally, you have access to a line of credit and you only need to make one monthly payment. You’ll need a good FICO or VantageScore, but it’s a viable option to manage and pay off your debt. 

Start paying down credit card debt today 

Happy man with credit card

Not paying off credit card balances in full can increase your debt due to high interest charges. If you currently carry debt on credit cards, you may want to consider using a balance transfer credit card

Balance transfer cards let you consolidate your balances onto a single card. These cards often come with introductory offers, such as 0% APR for 15 months after the date of account opening

When used correctly, a new balance transfer card allows you to pay down your existing credit card debt in a short amount of time.

If you don’t meet the eligibility requirements for a balance transfer card or don’t want to pay transfer fees, there are other debt-payoff options. Consider using the debt avalanche method, debt snowball method, or a credit card payoff app like Tally to start your path toward financial freedom.