Picking A Balance Transfer Credit Card In 2019

Balance transfer credit cards are in high demand these days, and for good reason. Picking the right one could save you a good bit of money in interest. While there are plenty of articles online about how to pick the best option, most of them are outdated. So, I decided to dig in and provide an updated view of what balance transfer credit cards are as of late and how to go about picking one.

What Are Balance Transfer Credit Cards

The definition of balance transfer credit cards has gone unchanged since they were invented. They are a type of credit card that allows cardholders to pay off other credit card accounts. Often times, they come with promotional interest rates that save consumers money. However, they also have their dark side, so picking the right one is very important.

What Has Changed Over The Years

Truth be told, the last time I looked into balance transfer credit cards was about eight years ago when I used a couple of them to erase my high interest debts. After digging into some of the best balance transfer credit card lists, there are a few things that I noticed have changed:

  • I Haven’t Seen An Option Without A Transfer Fee – While these types of accounts will come with 0% interest, that doesn’t mean that the bank is going to take on the debt without you incurring a fee. This was a change. When I needed balance transfer cards, there were a few options that charged no fee to transfer. Nonetheless, in my search, I was unable to find a transfer fee that was under 3% of the balance being transferred. Some of them were an outlandish 5%.
  • Lenders Are Getting Competitive In Other Ways – Although I didn’t have to deal with transfer fees, I definitely didn’t get the perks that are available now. Several years ago, balance transfer credit cards were just that. They were tools used to transfer a balance. Today, other features like cash back, travel rewards, and more are available on some of these accounts.
  • The Fine Print Can Be Ugly – It’s important to remember that credit card companies are in it to win it, and by win it, I mean make money. That’s why there are little quarks to balance transfer terms that give the lender the upper hand. One of the most important ones that is popping up is that promotional interest is paid first. So, let’s say that you are approved for a card with an $8,000 credit limit and you transfer a balance to the card of $2,000. From there, you use the card, racking up an additional $1,000 in debt. With this mix, until the introductory period is over, or the balance transfer is paid off, your minimum payments will be allocated to your promotional interest debt while the $1,000 of new debt sits and racks up the fees with a standard interest rate averaging around 17%.

Steps To Picking The Best Balance Transfer Credit Card

Now that you know what’s changed, here are the steps that you should take when comparing balance transfer credit cards:

  • Step #1: Look At The Standard Interest Rates First – When digging into your options, promotional interest rates will catch your attention. However, it’s worth considering that 33% of balance transfers aren’t paid off in time to avoid interest. So, you don’t want to get stuck with an interest rate in the high twenty percent range if you’re one of the one out of three consumers that are unable to pay their full balance transfer off in time.
  • Step #2: Compare Promotional Periods – There are plenty of offers out there that come with zero percent interest. So, it’s not worth settling for one that doesn’t, especially when you’re paying a fee to transfer the balance in the first place. So, look for zero percent promotional rates with the longest terms. The longest promotional period that I was able to find in my search also happened to be one of the most common at between 15 and 18 months.
  • Step #3: Compare Transfer Fees – The most common transfer fee is $10 or 3% of the balance being transferred. Considering that so many offers provide a decent promotional period with a fee of 3%, there’s no reason to pay more in this day in age!
  • Step #4: Look Into Rewards – I would have loved if my balance transfer credit cards were rewards cards as well. However, if you’re a compulsive shopper, this isn’t the type of credit card to have. Remember, promotional debts will be paid off first! So, until your balance transfers are paid off, you don’t want to use the card at all, no matter what the credit limit is. This will just lead to an unmanageable revolving door of debt.
  • Step #5: Read The Terms – Once you’ve compared the options, you’ve probably come up with two or three that you are considering. From there, read the terms and conditions for each one of the cards. Make sure that you understand everything you’re reading and that these terms are terms that you can agree to. This will generally make it easy to choose the best option out of the top contenders.

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