With the holidays now behind us, many credit card users are left with debt that they will be paying off for some time. Therefore, January seems like the perfect time to explore the best balance transfer credit cards as part of our Best Credit Cards in America series.
The last two articles in our Best Credit Cards in America series focused on reward cards, which are best used by those who don’t carry credit card debt. By definition, a balance transfer card is for a cardholder who already has credit card debt. Therefore, I judged these cards by the features that help cardholders get out of debt, and ignored rewards programs that encourage customers to spend more money. Next, I narrowed down the field to cards that offer at least one year of interest-free financing on new purchases and balance transfers.
So what factors should you consider when looking for the best balance transfer credit card? First, there is the duration of the balance transfer. The CARD Act of 2009 requires banks that offer promotional balance transfers grant cardholders at least six months before the standard interest rate begins to apply. Thankfully, the best products on the market now extend this period to as long as 18 months.
Next, you want to look at the balance transfer fee. Almost all cards add a balance transfer fee of 3 percent of the amount transferred. Some cards charge as much as 5 percent, and there is only one card that offers 0 percent APR interest without a balance transfer fee.
Finally, there are other important features to look for in a balance transfer card. Does the card offer interest-free financing on new purchases? How reasonable is the fee structure? And finally, what will the standard interest rate be once the promotional rate expires?
With these factors in mind, let’s take a look at which cards came out on top.
It should come as no surprise that the only credit card that offers 0 percent APR financing with no balance transfer fees is the clear leader in this field.
Why it won:
The balance transfer offer: Having no balance transfer fee is a huge advantage for this card, but it also has many other compelling features. Chase offers 15 months of interest-free financing on both new purchases and balance transfers. To qualify, balance transfers must be made within the first 60 days of opening an account. After the promotional rate expires, interest on any remaining balance will be accrued at 11.99 percent to 21.99 percent APR, depending on the cardholder’s credit worthiness. The cash advance APR is 23.99 percent and the penalty APR is 29.99 percent.
Other features: Holders of this card are also eligible to participate in Chase’s Blueprint program. This innovative feature allows customers to set a goal for paying off their balance, and helps them reach that goal by specifying the payment amount necessary to stay on track. There is no cost to enroll in Blueprint.
The costs: There is no annual fee for this card, but there is a 3 percent foreign transaction fee imposed on all charges processed outside of the U.S.
Why it won:
The balance transfer offer: PenFed matches the industry-leading 18 months of interest free financing and balance transfers and new purchases, but it also includes the near-standard 3 percent balance transfer fee. Interestingly, the maximum fee is $250, so those who perform a balance transfer in excess $8,333 will actually pay less than 3 percent. The standard APR is 12.49 percent, which applies to cash advances as well.
Other features: This card features emergency card replacement, automobile rental insurance, and a $100,000 travel accident insurance policy.
The costs: There is no annual fee, no foreign transaction fee, and no cash advance fees for this card. Applicants must join PenFed, the Pentagon Federal Credit Union. Their membership criteria are extremely broad and even those who don’t inherently qualify can do so by joining an organization such as Voices for America’s Troops for a one-time fee of $15.
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Why it won:
The balance transfer offer: Simplicity bests the Slate card by offering a full 18 months of interest-free financing on both balance transfers and new purchases, but there is a 3 percent balance transfer fee. After the promotional rate expires, cardholders will incur interest at an APR of 12.99 percent to 21.99 percent, depending on their credit worthiness. Thankfully, there is no penalty interest rate.
Other features: While the Slate is an extremely basic product, Simplicity cardholders enjoy features such as extended warranty protection, retail purchase protection, and Citi’s Price Rewind program.
The costs: There is no annual fee for this card, and no late fees if your payment is not on time. But there is a 3 percent foreign transaction fee.
At publishing time, Slate from Chase and Citi Simplicity are offered through Credit.com product pages and Credit.com may be compensated if our users apply for and ultimately sign up for these cards. However, this relationship does not result in any preferential editorial treatment.