Balance Transfers on Credit Cards: What You Need to Know

If you’ve spent one too many months staring at your swelling credit card balance—and all that interest you’re paying—that piece of junk mail promising a 0% balance transfer credit card probably looks pretty enticing.

Sure, balance transfers can be a fast way to curb how much you’re paying in interest, but let me tell you from personal experience: proceed with caution.

For the financially-savvy, balance transfer offers are a way to borrow money cheaply. For others struggling with credit card debt, 0% balance transfer offers can be wolves in sheep’s clothing; they provide temporary relief from crushing interest rates but often, balance transfers ultimately prolong—or exacerbate—the problem. (In the latter case, imagine you take a 0% balance transfer offer with good intentions to pay down the debt within a year and save hundreds in interest. But transferring the balance “clears room” on another credit card, which you can end up using again, creating more debt).

To Transfer or Not to Transfer

Before you transfer a balance, ask yourself: Is this really a good deal for me?

Keep in mind that balance transfer fees have gone up. The industry standard was once 3%, now many cards charge 4% or 5% of the balance transferred. Gone are the days where you could use cash from a 0% balance transfer offer to stash in a high yield savings account at 5% APY.

An example: If you’re repaying a debt at a 15% APR or higher over six months or more, a 0% balance transfer with a 5% fee starts to make sense. (The actual break even-point depends on your actual APR and your monthly payments, of course.) If, however, you could repay the debt in less than six months, you might not actually save anything with the 0% balance transfer. You would, however, be tempted to let the debt hang around longer because you’re not paying interest…for now. You never know when you might face an emergency or lose your income and be stuck with an unpaid debt and an expiring introductory interest rate.

One final consideration is that just because cards advertise great balance transfer rates, doesn’t mean you’ll qualify. Card companies reserve the best cards for people with A+ credit. In general, though, expect to need a credit score of at least 700 to quality for the best offers. You can check your credit score free (really) here.

Looking for a balance transfer card? Here are some of the best offers:

You can also browse my most recommended credit cards or a list of all balance transfer credit cards here.

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