How to Choose the Best 0% Balance Transfer Credit Cards

by Junior Boomer on April 7, 2010

Like many working class individuals, I had accumulated some unnecessary credit card debt along the way. With all the credit card processing companies out there, it makes it that much easier to over-use credit cards.

It was manageable credit card debt, but with an interest rate that was hovering around 15%, I knew I could do better. I started doing research into 0% balance transfer credit cards, but quickly realized there were tons of choices. Knowing I didn’t want to make a mistake, I read a lot of fine print to make sure that I wouldn’t have to pay any unnecessary fees when I did the balance transfer.

When the dust had settled and my eyes hurt from reading all the fine print, I had settled on doing a 0% balance transfer to a Discover card.  Keep in mind that I did my transfer over 10 years ago and, ironically, Discover still has one of, if not the best, 0% balance transfer credit card offers.

Fees to Look For on Credit Card Balance Transfers

Much has changed since I did my first 0% balance transfer of my credit card.  Back in the day it was much easier to find transfer offers that had little to no fees.  Credit card regulations have made the process a little more tricky, but as long you are aware of the potential fees, it can still be very fruitful.

  • Annual Fee: Preferably, you want a card with no annual fee, but some may charge a nominal fee in the $20-$50 range.
  • Transfer Fee: When I did a balance transfer, I’m fairly certain that I didn’t have to pay a transfer fee on my balance.  Nowadays, the industry standard is 3%.
  • Late Fees: Missing a payment could be detrimental to your credit score and extremely expensive if your company hikes up the rate.  Be sure to double check what exactly does happen if you happen to miss a payment.
  • Rate for Purchases: Your new card might have 0% for balance transfers, but what about for purchases?
  • APR: 0% is nice, but eventually the party has to end.  Be sure to know what the interest rate increases to after the introductory period runs out.

Why Do Credit Card Companies Offer 0% Balance Transfer Credit Cards?

It almost seems like the credit cards are giving away free money doesn’t it?   That’s exactly what I thought.  0% interest on anything debt sounds almost too good to be true, but it makes sense.  Why?   For anyone that does a 0% balance transfer to a new credit card, you only have a certain period of the introductory offer.  Most that take advantage of these balance transfer offers will not have paid the entire balance by then.  The credit card company now has a new customer paying interest on those transferred balances.

This, of course, doesn’t acknowledge the fact that these customers will most likely be purchasing more with their new card.  In the end, that’s the credit card companies goal.

How Long Does it Take to Do a Balance Transfer?

If you have a credit card with an interest rate greater than 20%, then most likely you’re ready to transfer yesterday, right?  If the thought of accumulating another interest charge is eating away at you, the first thing you need to do is apply for a balance transfer card.  That’s the first step.   Even after you apply, you still want to keep sure you make payments to the current high interest card to avoid any late payments.  Most balance transfers will take approximately two weeks for it to fully process.  Why does it take so long?  After you apply, the new card has to send a payment to your existing card.   The holdup can be in your existing card accepting and then crediting the payment.

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{ 4 comments… read them below or add one }

Ben November 17, 2010 at 12:40 pm

It is important when transferring balances that you look at all the details of the new card. The reason this is successful for credit card companies is because most people carry their balance into the full rate cycle. If your new rate is much higher than your old one you will eventually lose money.

It is a plan that can work, but be diligent and educate yourself on the new offer.

Ryan @ Planting Dollars December 29, 2010 at 2:46 pm

I currently use the Platinum select card for the majority of purchases and haven’t had any issues with it.

Bryan Walsh March 14, 2011 at 2:40 am

i think it’s better not to get trouble with credit card….avoid it if you can……

Dan - BankVibe August 30, 2011 at 6:50 am

Wait until discover bank issues there no balance transfer fee credit card. They usually offer this promotional product once a year (usually after christmas) and they make it available for about a month, so there’s a kind of small window for applications. But if you have significant debt you can save hundreds by not paying this fee that comes with all other cards…

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