Balance Transfers 101

1.) What is a Balance Transfer?

A balance transfer is the act of transferring debt from one credit card to a new card that has a lower interest rate. There are two types of balance transfers: limited duration balance transfers and fixed rate balance transfer.

A limited duration balance transfer provides a low interest rate on balance transfers for a limited amount of time. For example, a credit card that offers 0% interest on balance transfers for 1 year.

A fixed APR balance transfer offers an interest rate that will not change until the balance is repaid or a predetermined time period expires. For example, a credit card that charges a 4.99% interest rate until the balance is repaid.

Unfortunaly, there is no such thing as a credit card that offers a “0% fixed APR balance transfer for life.” This is an urban legend that is probably based on the nightmare of a credit card executive.

2.) What is a good balance transfer offer?

Credit cards that offer 0% interest rates on balance transfers and purchases for one year are generally the best offers, as you can defer paying credit card interest for a full year.

Most credit cards that offer 0% interest rates on balance transfers and purchases charge a 3% balance transfer fee up to a maximum of $75. For a person making a large transfer of $5,000, the maximum fee of $75 would only be a 1.5% fee.

Some credit cards occasionally offer 0% APR no fee balance transfers. Over the past three years, the amount of no fee balance transfer credit cards available to consumers has declined significantly. However, these credit cards still do exist.

Unfortunately, it is extremely rare to find a credit card that offers 0% no fee transfers and a 0% interest rate on purchases. Thus, if you want to save on interest expenses you would incur making new purchases, a credit card that offers a 0% interest rate on purchases and balance transfers may be the best option.

3.) How much can I save with a new balance transfer credit card?

At current rates, the average consumer can save $140 for every $1,000 transferred. The exact amount you’ll save will vary on based on your current interest rate. To find out how much you can save on interest, use our balance transfer calculator to get an estimate.

View current 0% Balance Transfer Offers