I am often asked a seemingly simple question: what is the best balance transfer credit card? Unfortunately, the answer can be quite complicated. However, the short answer to this question is simple: apply for a 0% APR balance transfer credit card that charges no balance transfer fees.
Over the past three years, the number of credit cards offering no fee 0% interest balance transfers has declined substantially. Today, there are rarely more than two or three of these offers on the market at one time. Additionally, there used to be credit cards that offered no fee balance transfers with a 0% interest rate on purchases and balance transfers. Today, all such offers have disappeared.
Consequently, I have developed a few quick rules to help people determine if a 0% no fees balance transfer is better than a credit card that offers 0% on both purchases and balance transfers.
Rule # 1:
If you will be carrying a credit card balance from month to month on any credit card, a no fee balance transfer may not be the best option. Why? The standard fee for most 0% balance transfer offers is 3% with a $ 75 maximum. If, for example, you carry a balance of only $ 1000 on a credit card with a 14% interest rate during the year, you will rack up more than $ 150 in interest on your new purchases. So, if you know you will use your credit card for more than balance transfers, avoid the no fee offers and stick with a credit card that offers a 0% APR on everything.
Rule # 2:
Read the fine print. While I can not name names here, a number of companies have raised the maximum balance transfer fees to $ 250. While this only effects those of you transferring more than $ 2500, these absurd fees can be easily avoided.
Rule # 3:
Plan ahead. 0% APR balance transfers do not last forever, so it is always wise to choose a balance transfer credit card that offers a low long term APR as well as a 0% intro rate. Of course, you could theoretically transfer your balance from card to card when the 0% APR expires. However, just in case you can not, a low APR acts as an insurance policy.
The choice between a no fee balance transfer and a 0% APR credit card for purchases and balance transfers is clearly not as simple as it looks. However, if you take your spending habits into consideration, finding balance transfer deal that will save you the most money does not have to be a daunting task.