Home > Credit Cards > How to Pick a Credit Card Balance Transfer Offer

Comments 0 Comments

Credit card balance transfer offers are quite appealing at first glance, as they grant debtors temporary relief from high APRs. However, not all offers are created equal. Many of them have fees and clauses that can increase your outstanding credit card balances if you don’t read the fine print and use the card properly.

Below are a few factors to consider when assessing credit card balance transfer offers.

Introductory Interest Rate

The lower the introductory APR, the more favorable the balance transfer offer. You must also consider the longevity of the offer to ensure that you will derive the greatest benefit from it. An introductory rate of 0% on a balance transfer that is valid for three months may seem beneficial, but this is only the case if the APR will remain low after the introductory offer expires, and the standard card fees are affordable. On the other hand, if the APR reverts to a percentage that is comparable to or higher than what you are currently paying, it is wise to examine other offers. Keep in mind that if you make a late payment, the issuer might revoke the introductory offer and give you a penalty APR, which could derail your get-out-of-debt plan. So be sure to always make your payment on time.

Fees

Along with the introductory APR and its duration, you will also need to consider accompanying fees. Most balance transfer offers come with a flat fee of 2%-5% of the amount being transferred to the card. In addition, annual fees are not uncommon, and you should ensure the cost outweighs the benefits, as you will be responsible for paying the annual fee whether or not the card is in use. Another item to consider is dormancy fees if you no longer plan to use the credit card once the balance transfer offer expires and the debt is paid off. It is always possible to close out the credit card, but that can lower your credit score if it raises your credit utilization significantly.

Flexibility

If the card automatically applies the promotional balance transfer APR to standard purchases during the introductory period, you may save a substantial amount of money on purchases that would otherwise be assessed the standard interest rate. However, this option should only be exercised in emergency situations, and not for shopping sprees — to ensure that you keep your debt under control while using the balance transfer offer to pay off your debt (not add to it).

Maximum Credit Limit

Depending on the credit limit you qualify for, it’s possible that you may be approved for less than the credit card balances you plan to transfer. However, if you are unable to find an offer that accommodates your balance and the accompanying fees, you may have to settle for transferring less of your debt for the time being, or shop for other offers.

The optimal solution is a credit card with no annual fee that offers the lowest promotional rate and transfer fee for the longest period of time. Although credit card balance transfer offers can save you a lot of money on interest, it’s best to only use them if you have a plan to get out of debt before the promotional offer ends, or shortly thereafter.

And before you apply for any credit card, it’s important to be aware of your credit score, as that will inform what kind of credit card you’ll be approved for. For example, if you apply for a card that is generally given to people with “excellent” credit, but your score is in the “fair” range, you likely won’t get approved, or you could be given a card with a higher APR.

Checking your credit scores can help you be better informed when you shop for credit cards (or loans), and checking them regularly can help you track your progress as you pay down your debts. Credit.com offers a tool that gives you your credit scores and a breakdown of your credit profile – for free – to help you figure out what you need to work on to build your credit.

Image: iStock

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team