The pros & cons of balance transfer credit cards


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A balance transfer can help you save money on interest charges. However, if you don’t plan your finances right, a new card can get you deeper into debt. Carrying out multiple balance transfers is usually a sign of poor debt management. You should ideally try to pay down your balances as quickly as possible, failing which you’ll end up paying a considerable sum in interest charges.

  • When handled right, a balance transfer may lead to monetary savings.
  • A balance transfer has the potential to affect your credit score.
  • 0% APR offers on balance transfers usually last from six to 21 months.

What Are the Advantages and Disadvantages of a Balance Transfer?

Several people turn to credit card balance transfers with the aim of saving money. However, not everyone succeeds, and instances of balance transfers going wrong are fairly common. Before you decide to take the plunge, it’s important to determine if a balance transfer is a good idea in your case.


  • Save money on interest: A number of credit cards come with 0% APR offers on balance transfers, and the introductory rate usually stays in place for six to 21 months. If you transfer a balance from a high-interest credit card to any such card and pay off the balance completely within the promo period, you would pay no interest. In another scenario, you might also save money by transferring a balance from a high-interest card to one with a lower APR. For example, if you have a significant balance on a card with an APR of 24.70%, you might benefit from transferring it to a card with a 14.30% APR.
  • Consolidate credit card debt: You have the option of transferring balances from multiple cards to a single card, provided the total of the transferred balances remains below your available credit limit. If making payments toward multiple cards each month seems like a hassle, you may consider transferring their balances to a single card. This way, you’ll need to make just one credit card payment every month. However, it’s important that you look at the new card’s APR and balance transfer fees before moving forward.
  • Get better features and perks: If your existing credit card offers little in terms of features or benefits and has a high APR, you may consider transferring its balance to a different card. A number of balance transfer cards give cardholders the ability to earn cash back/rewards, and these include some that charge no annual fees. If you’re a frequent traveler, you might benefit by transferring your balance to a travel credit card, provided you qualify for a competitive interest rate. Several no-annual-fee cards also offer benefits such as no foreign transaction fees, complimentary insurance coverage and extended warranty.
  • Possible improvement in credit score: If your new balance transfer card adds to your overall available credit, it helps bring down your credit utilization ratio. This refers to the credit you’ve used compared to your total available credit and should ideally remain at 30% or lower. For example, if you have just one credit card with a credit limit of $10,000 and an outstanding balance of $5,000, your credit utilization ratio is 50%. If you transfer this balance to a new card that also has a credit limit of $10,000, your total credit limit increases to $20,000. Without adding any more debt, your credit utilization ratio drops to 25%. A low credit utilization ratio helps build your credit score.


  • Balance transfer fees: If you’re transferring a balance to a card with a 0% APR offer, you will, in all likelihood, need to pay a balance transfer fee of 3% to 5%. That’s $15 to $25 for every $500 you transfer. This might also be the case with cards that charge low interest rates on balance transfers.
  • Time-based offers: Every 0% APR offer on balance transfers lasts for a predetermined period, typically ranging from six to 21 months. Once this period ends, a card’s regular APR applies to any outstanding balance.
  • Termination of offer and penalty APR: Making a late or a returned payment may lead to an early termination of the promotional interest rate. Any outstanding balance after this point starts accruing interest at the card’s regular APR. Your card provider might also apply a penalty APR on balances from purchases in such scenarios.
  • Need good to excellent credit: Most credit cards with balance transfer offers require that applicants have good to excellent credit. This is also the case if you hope to qualify for a low regular APR. While balance transfer cards for people with fair credit are typically hard to come by, there are a few options. Examples include the Navy Federal Union Platinum Credit Card and Citi Double Cash Card.
  • Building more debt: Getting a new credit card results in increasing the credit you have available. If you’re not careful with your spending, this may lead to building more debt than you can repay comfortably. If you think you might have trouble keeping your expenses in check, you may want to consider closing your old credit card account after your balance transfer. However, doing so may impact your credit score.
  • Possible drop in credit score: A balance transfer might hurt your credit score in two ways. If the new card comes with a lower credit limit than your existing card, and if you close your existing card’s account after the transfer, you may expect your credit utilization ratio to rise. For example, if you have just one credit card with a $10,000 credit limit and an outstanding balance of $2,000, your credit utilization ratio is 20%. If you transfer this amount to a card with a credit limit of $5,000 and close your old credit card account, your credit utilization ratio would increase to 40%. In addition, getting a new card or canceling an old card may bring down the average age of your credit accounts.

What Are the Risks of Transferring Balances?

While the benefits of balance transfers might seem appealing, it’s important that you understand the potential risks at the very outset. For starters, you need to account for the balance transfer fees you need to pay. If you make no more than minimum monthly payments during a 0% APR offer’s promo period, you would not be able to bring down the total amount you owe by much. The outstanding balance at the end of the offer period would start accruing interest, which could be higher than that of your old card.

The risk of your card provider terminating a 0% APR balance transfer offer exists if you miss making even a single payment on time. Adding another card to your credit portfolio comes with the risk of increased spending. This might not work well if you wish to be debt-free but are indiscriminate with your spending. In addition, getting a new card and closing your old credit card account might affect your credit score adversely.


If you feel that a balance transfer is a good idea to deal with your particular situation after weighing its pros and cons, look for a card based on factors such as the duration of the promo period, regular APRs, annual fees and added benefits. We’ve narrowed down on the best of the lot by relying on our unique ranking methodology.


If you miss a payment, your promotional interest rate may expire early. Set up automatic payment of the minimum amount due to avoid late fees and interest rate surprises. — Lee Huffman, credit card expert at

Alternatives to Balance Transfers

Transferring one or more outstanding credit card balances to a new card is not the only effective way to deal with credit card debt. For instance, you may think about getting a debt consolidation loan if you qualify for a competitive interest rate. In cases that involve seemingly unmanageable debt, credit counseling might be the way to go.

  • Personal loans: Often marketed as debt consolidation loans, these types of loans give you the ability to consolidate your credit card debt. Depending on factors such as your creditworthiness and income, you might qualify for a lower APR than that which applies to your credit card.
  • Negotiate a payoff: If you have enough money, you might be able to negotiate a payoff with your credit card provider(s). In this case, you’ll need to pay a lump sum amount that’s lower than the actual amount you owe to clear your debt completely. Be aware that many lenders will issue you a Form 1099 for the forgiven debt. This may be considered taxable income and, if so, needs to be included in your tax returns.
  • Counseling: If you think you cannot manage your credit card debt on your own, getting in touch with a nonprofit credit counseling organization might be in your best interest. In this scenario, you might benefit by going through the advice that the Federal Trade Commission offers about choosing a credit counselor and how to make debt management plans work for you.

Other Questions You May Have About Balance Transfer Cards

Understanding answers to other commonly asked questions about the pros and cons of transferring credit card balances will help you decide if you should take this path.

Is a balance transfer a good idea?

A balance transfer is a good idea when you have a clear payment strategy in place since that balance transfer should help you save on interest charges. This could be by using a card with a 0% APR offer on balance transfers or a card that comes with a lower APR than the card from which you wish to transfer a balance.

Should you open a new credit card to transfer a balance?

You may want to consider getting a new credit card to transfer a balance in order to take advantage of an introductory 0% APR offer. But this is usually only recommended if you plan to pay off the entire amount or bring it down significantly before the promotional period ends. Any outstanding balance after the promotion expires starts accruing interest. If you have a considerable balance on a high-interest credit card, you may also want to consider transferring it to a card with a lower APR (after accounting for any possible balance transfer fees).

Is it better to transfer credit card balances than to continue paying high interest charges?

If you have a sizable outstanding balance on a high-interest credit card that you don’t plan to pay off completely within the next few months, transferring its balance to a card with a lower APR or one that has a 0% APR offer might work better than continuing to pay high interest charges on your existing card.

Should I use a balance transfer offer?

You may want to consider using a balance transfer offer if you think you can pay off the transferred amount completely or bring it down significantly during the promotional period. This is because any outstanding balance after the promo period ends starts accruing interest at the card’s regular balance transfer APR. If you plan to make just minimum monthly payments, you won’t manage to bring the outstanding balance down by much. Besides, your starting balance with the new card will also include any applicable balance transfer fees.

Is it worth paying a balance transfer fee?

It might be worth paying a balance transfer fee if you’re certain of bringing the transferred balance down significantly or paying it off completely during a card’s 0% APR offer on balance transfers. If you plan to transfer a balance from a high-interest credit card to a low-interest card, you need to determine if the difference in their APRs exceeds the balance transfer fee. For example, if you need to pay a 3% balance transfer fee, the difference between the APRs of your old and new card should exceed this number, and the higher the difference, the better.

What’s the best balance transfer card to get with a 650 score on Equifax?

A credit score of 650 on Equifax is regarded as fair. Most balance transfer credit cards require good to excellent credit, although there are exceptions for people with fair credit. These include the Navy Federal Union Platinum Credit Card and Citi Double Cash Card.

Is it better to pay a 4% fee and zero interest or an interest rate of 6.99% with no fee on a $4,300 credit card balance transfer?

This depends on how long you take to pay off the balance. Assume that the 0% APR on the card stays in place for 12 billing cycles, during which you pay off the entire $4,300. In this case, you pay 4% of the transferred amount as fees, which is $172. If you use the card with the 6.99% APR and take 12 months to repay the entire amount, you’ll end up paying $139 as interest charges. The latter comes out the winner in this case because while the 4% fee applies to the entire transferred balance, the 6.99% APR applies to your average daily balance that will keep reducing with time.

On the other hand, assume that you pay only $100 per month toward the card with the 0% APR offer during the 12-month promo period. After the 12 months, you’d be left with an outstanding balance of $3,300 (assuming you paid no balance transfer fees). Going forward, if you continue making $100 payments, it will take 42 months to clear the debt completely, and you’ll pay around $830 in interest charges.

Making $100 payments toward a $4,300 balance on a card with a 6.99% APR will take 50 months to repay the debt completely, and you’ll pay around $630 in interest charges. Using the card with the 6.99% APR, in this case, will result in you paying off the debt four months sooner, and you’ll save around $200 in interest charges.

When paying off credit cards using balance transfers, is it better to pay them off before the introductory APR runs out or to use the avalanche effect and pay off other high-interest credit cards first?

Try to include your high-interest credit card debt in your balance transfer. If that’s not possible, look at the regular APR that will apply on any outstanding balance of your balance transfer once the introductory period ends. If it’s lower than the APR of your high-interest rate cards, you may rely on the debt avalanche method and pay them off first. If the regular APR of your balance transfer card is higher than that of your other high-interest rate cards, consider paying off the transferred balance first.

Next Steps

Now that you understand the pros and cons of balance transfers, determine if taking this path might work well for you. If you feel it might, then base your search for a suitable balance transfer card on factors such as duration of the 0% APR offer, annual fees, regular APRs and additional benefits.


This article originally appeared on and was syndicated by

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25 can’t-miss credit card perks


Signing up for a credit card that offers the best benefits makes a lot of sense. And it’s natural to focus on highly-publicized rewards and special offers. But you might be surprised to learn that there are a number of everyday perks that can come with your credit card.

Not every credit card offers the same perks, so you’ll need to read your card’s fine print so you can understand its benefits and get a feel for what’s available. We’re willing to bet that if you do, you’ll find some interesting stuff.

Here are some of the most useful and unexpected credit card perks we know of — including some suggested to us by members of our FBZ Elite – Travel and Points Facebook group.


There are few things more frustrating than making a purchase, only to see the item drop in price a few days later. This is where price protection comes in. If you bought something with your credit card and the price drops within a certain period of time, some credit cards will reimburse you for the difference.

Double-check the fine print. There might be a limit on the dollar amount you can receive per item and per 12-month period. Also understand the documentation requirements, such as having a receipt.


With purchase protection, you can be reimbursed if an item you bought on your credit card is stolen, damaged, or even lost. You often have to go through your homeowners insurance or other policy first. If the item isn’t covered, you might be able to get reimbursed within a certain time period after the item was purchased.

Steven H., a member of our FBZ Elite – Travel and Points Facebook group, reported that he received a refund on a broken hockey stick with this particular credit card perk.


With return protection, you might be able to extend your ability to bring an item back to the store. For example, if you’re past a store’s 30-day return window and can’t return an item, you can request a refund from your card issuer in some cases.

Be aware that there are usually still time limits and documentation needs, so check your card benefits to make sure you’re meeting the requirements.


Similar to other types of protection, online shopping protection can help you when things go awry. If your package is stolen or if an item arrives damaged and the seller won’t refund you, it might be possible to get your money back as part of a credit card perk.


When the manufacturer’s warranty expires, you might be able to benefit from extended warranty protection. Tyler L., a member of our FBZ Elite – Travel and Points Facebook group, said his MacBook Pro died one month after the warranty ended. When Apple wouldn’t take care of it, his credit card issuer sent him enough money to cover the cost of a replacement.

In general, a credit card issuer will let you know whether it will double or triple the manufacturer’s warranty and what you need to do to qualify. You usually need to buy the item with the credit card in order for it to be covered.


“I’d say cell phone insurance,” Steve M. said in our FBZ Elite – Travel and Points Facebook group. “If you have a bunch of phones on your plan, this simple benefit can save some money rather than [paying] the carrier’s insurance.”

And that’s exactly what cell phone protection does. If you buy your cell phone with a credit card that offers this perk, you can receive reimbursement for the phone if it’s broken or damaged. Rather than paying a monthly premium to your carrier, you might already have access to this insurance as a perk with your credit card.


This is a common perk because there are certain steps that credit cards have to take by law to protect you from fraud. If a fraudulent charge is made to your credit card and you notify your card issuer within 60 days of the statement date, you shouldn’t be responsible for the charges. The law limits your liability of unauthorized credit card use to $50.

Some credit card issuers have even more robust protections. Check with your issuer to find out what type of protection you have to see if it includes $0 fraud liability.


SeventyFour / istockphoto


Increasingly, credit card issuers offer access to some version of your credit score. You might get access to a score from a specific credit-reporting agency or even access to your entire report.

Some credit card issuers also offer credit-monitoring services free of charge, so if something negative appears on your report, you can receive an alert and see if it needs to be dealt with.


Depending on the card, you might be able to get a long introductory period of up to 24 months with 0% APR (annual percentage rate) or a great deal on a balance transfer. Some cards go even further.

It’s also possible for some military members to enjoy no interest for a much longer period. According to Chris P., a member of our FBZ Elite — Travel and Points Facebook group, his luxury card waived his cash advance fee and gave him a 0% APR until 2099. “I was able to essentially take out a $35,000 loan for life with no interest or fees,” Chris wrote.

If you have a special circumstance, check to see if your card comes with an extra-long period of no interest.


Looking for help finding something or making arrangements? Many credit cards offer complimentary concierge services. You can get help making travel arrangements or finding a drugstore when you visit a foreign city.

Find out what your card’s concierge services entail and get their number. Then, when you need help with anything, all you need to do is call.


When I paid my Global Entry fee with one of my travel credit cards, I received a $100 credit on my next statement, offsetting the cost. This is a great perk that many travel cards offer, allowing you to skip the lines at the airport.

Check your cardmember benefits to see whether this perk is available to you, and make sure you understand the fine print. In many cases, you can only get the credit every four or four and a half years, depending on whether you get Global Entry or TSA PreCheck.

Also, consider that because these programs have different prices, the amount of your statement credit will depend on which program you sign up for.


I have three different travel credit cards, and they all come with great perks for frequent travelers. Depending on the card you have and whether it’s tied to a specific airline, you might be able to enjoy perks like:

  • Free cabin upgrades when available
  • Priority boarding
  • One or two free checked bags
  • Lounge access
  • Discounts on inflight purchases

With these kinds of perks, it’s possible to enjoy a better travel experience — and even save money.


Do you have a small business credit card? You don’t have to feel left out on perks. Many small business credit cards come with extras like built-in expense management tools. You might also enjoy a monthly credit with Uber, WeWork membership, or access to ZipRecruiter. Additionally, some small business credit cards offer credits for telecommunications bills or help you buy computers.


Some cards come with VIP event access. You might be able to go behind the scenes at Sundance or have access to hard-to-get PGA (Professional Golfers’ Association of America) Masters tickets. Backstage passes to concerts, special receptions, and meet-and-greets might all be available, depending on the card.

Cardholders may also have the opportunity to buy concert and event tickets before they go on sale to the general public. Additionally, you might get preferred seating access at certain venues. If you enjoy unique experiences, check your cardmember benefits to see what’s available.


If you like a little bit of culture in your life, see if your card issuer offers museum access. One of the most popular programs is Bank of America’s Museums on Us. You might also see free or discounted access to other cultural experiences, including certain zoos.


Depending on the partners your credit issuer has, you might get access to a number of discounts and upgrades. This could include discounts when you shop at certain stores or upgrades when you rent a car. Some credit card issuers offer access to high-end resort hotels. You might also receive automatic status in different hotel rewards programs.

One member of our FBZ Elite — Travel and Points Facebook group, Elery T., wrote that she uses hotel credit cards that grant Gold, Platinum, or Diamond status — and having status usually results in an upgrade. “I have lost count on how many times our standard rooms have been upgraded due to having status,” she said.


Before you spend money in a regular store, check to see if your credit card issuer offers extra cash back through its online portal. Depending on the card, you could get between 10% and 25% extra cash back or points when you buy through the card’s online portal. This amounts to a discount on purchases you’d be making anyway.


Some consumer and business credit cards offer Uber or Lyft credits each month. You can take free rides just for having a certain credit card. This can be a huge help when you’re getting around in a new city.


Many credit cards offer insurance on your rental car. You might be able to have damages covered without paying the hefty price required by the rental car company.

However, it’s important to read the fine print on this benefit. Some cards offer only secondary rental car insurance coverage, which means it covers you only if your primary auto insurer doesn’t. Additionally, you might need to sign a waiver declining the coverage from the rental car company for your credit card to pick up the tab.

I found this coverage useful when someone did a hit-and-run on my parked rental car while I was on vacation. My credit card came with primary rental car insurance, which reimbursed me the money I paid for the damage.


Ricky S., another member of our FBZ Elite — Travel and Points Facebook group, said he’s used the roadside assistance perk three times so far — on behalf of other people. The perk covered various situations, including being locked out of the car, running out of gas, and having a flat tire. “It didn’t cost me a dime but sure made my day better when helping others,” he wrote.

Find out if you can get roadside assistance from your credit card issuer and avoid paying for an auto-club membership or filing an insurance claim.


When I travel abroad, I bring one of my cards that doesn’t charge foreign transaction fees. Many of the best travel cards won’t charge you this extra fee. It’s a great way to save money when you’re out of the country, and it saves the hassle of dealing too much with local currency.


No one likes their luggage being lost or damaged. You can incur extra costs in these situations, and it’s not a fun way to start or end a trip. With a credit card perk that covers lost or damaged baggage, you can be reimbursed for the associated costs. As always, make sure you understand the limits and requirements.


Was your trip canceled due to illness, death of a loved one, weather, or some other issue? You might be eligible to get your money back if your credit card has a trip cancellation perk. Before you buy an extra policy from your travel-booking website, look in your cardmember benefits to see if you’re already protected.

In addition to trip cancellation insurance, you might also be reimbursed if your trip is interrupted partway through or if you incur costs due to delays.


Depending on the card and the situation, you might be eligible for reimbursement of medical costs related to injuries received while traveling. It might also provide money to your beneficiaries if you die while traveling. This can be a good supplement to other coverage you might have, especially if you need help meeting a medical deductible.


Emergency travel assistance might help you get out of an area in an emergency situation. It’s important to check the policy to see what types of travel are covered. Some credit card perks don’t include adventure travel, so you if you have to be evacuated from a mountain top, you might not be covered. Others have limitations based on the country you visit.

No matter the credit card perk, always check the fine print in your cardmember benefits so you know what to expect. When you start paying attention, you might be surprised at how much money you can save by using the perks you’re already entitled to.

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