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More than half of credit card holders have carry a balance, according to a recent study by the Consumer Financial Protection Bureau, yet less than 20% of cardholders have ever transferred a balance.
The good news is that you can do this. It’s called a balance transfer and involves moving the balance from one credit card—presumably with a higher interest rate—to another card offering low or no interest for an introductory period.
“Interest rates are so high right now,” says Ted Rossman, an industry analyst for CreditCards.com. “That can really add up for people. So the ability to transfer your balance and pay 0% interest for 12, 15 or 20 months is really impactful.”
Here are some things to keep in mind:
Check for balance transfer fees. The vast majority of cards that allow a balance transfer will charge a balance transfer fee, typically about 3% to 5% of the transferred balance. Weigh the fee carefully against the number of months you’ll pay no or low interest. And know that there are two credit cards that don’t charge a fee: Chase Slate and the American Express Everyday. Both offer 0% interest for 15 months.
Best Everyday Credit Cards
Amex EveryDay® Credit Card
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Amex EveryDay® Credit Card
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Pros
- No annual fee
- Flexible rewards program with an impressive variety of redemption categories
- Intro bonus requires spending only $1,000 within the first 3 months
Cons
- Foreign transaction fee of 2.7%
- Above-average regular APR
Regular Apr
16.24 - 26.24 variable APR on purchases and balance transfers
Highlights
- Earn 25,000 Membership Rewards® Points after you use your new Card to make $2,000 in purchases in your first 3 months
- Earn 2x Membership Rewards® points at US supermarkets on up to $6,000 per year in purchases
- Earn 2x Membership Rewards® points when you use your Card to book your trip through AmexTravel.com
- Earn 1 Membership Rewards® point for every eligible dollar you spend on everything else
- You can use Membership Rewards® points towards eligible charges you make on your Card, such as retail, dining, entertainment and more
- Payment Flexibility: Your Card gives you the option to carry a balance with interest or pay in full each month
- When you use your American Express® Card for eligible purchases, you can get up to two extra years added to the original manufacturer’s warranty
Rates & Fees
Regular Apr
16.24 - 26.24 variable APR on purchases and balance transfers
Intro Balance Transfers APR
View Details
You’ll need pretty good credit. You’ll typically need a credit score of at least 670—considered good to excellent—to score one of these cards, although that’s not iron clad. “I’ve definitely heard of people with slightly lower scores getting approved,” Rossman says. “It doesn’t hurt to try.”
It’s best if you can stop charging to the card. If you’re serious about getting out of debt, transfer your balance to your new lower-rate card and then pay it down, period. “Don’t put any new purchases on there, because that’s just going to make it even harder to get out of debt,” Rossman says. “Don’t get enamored with the fancy rewards or travel perks or sign-up bonus. If you have debt, this would be expressly with the purpose of knocking down that debt as quickly and cost effectively as possible.”
Make a pay-off plan. That plan would ideally involve paying off your total debt before your introductory rate wears off—but if you can’t do it, don’t panic. You’re still saving significant money by paying down debt at a lower interest rate. If you have a balance left at the end of your introductory term, consider transferring to another card to continue your pay-down. “I wouldn’t want somebody to put $3,000 worth of debt on a card for 15 months and at the end of that they still owe $2,500,” Rossman says. “That’s kind of a road to nowhere.” But if you’re making progress, continuing to a second balance transfer card isn’t a bad idea.
Ask for an extension if needed. Alternatively, if you reach the end of your introductory period and you’ve still got a balance, call your card issuer and ask them to extend the low rate for a few more months. This helps if you have another offer in your hand from a card dangling a longer introductory period than you’ve gotten. “You might be surprised how often this works,” Rossman says.
Transfer can’t be with same issuer. Transfers must occur between cards issued by different banks. Most credit card issuers won’t permit you to transfer a balance between two cards they have issued.
