Those who live under mountains of credit card debt say that their suffering has two parts. First, the services that will be charged to your credit card and the number of goods. Second, the financing charges imposed each month on your balance.
With each account statement cycle, your average daily balance is multiplied by a twelfth of the Annual Percentage Rate (APR) of the credit card. Therefore, if you owe ten thousand US $ on a card with an APR of 12%, you will have a hundred US$ of interest every month. And The financial charges earned each month are added to your balance, resulting in increased interest accrued with each month that passes.
How does a balance transfer work?
To help ease the debt burden and acquire new customers, banks often offer credit cards with an annual percentage rate (APR) of 0%, for a limited time, in balance transfers. Qualifying applicants can have their balance paid with their new card, And During the time the zero percent rate is applied, and no interest is accrued on the transferred balance. However, the amount of transfer is almost always subject to a single balance transfer fee. This rate is generally three to five percent. In addition, the owner of credit cards remains responsible for making minimum payments. New transactions may generate interest at the standard rate, although in some cases, the zero percent promotional rates also apply to new purchases.
And finally, no matter how much you are struggling with debt, it is vital that you continue making all your payments on time since the only applicants with excellent credit qualifies for the most promotional credit card offers.
Saving money with a balance transfer
It is essential that those who seek this do so as part of a comprehensive plan to eliminate their credit card debts. Its said plan should be focused on maximizing income, minimizing expenses and regularly paying the total balance of the credit card before its promotional rate expires.
So as part of the plan to eliminate debt, the benefits of a balance transfer are clearer. For example, if an owner of the credit card has a balance of ten thousand US$ on a card with an annual percentage rate of fifteen percent, he is accumulating one hundred twenty-five the US $ in interest each month. If you continue paying interest while reducing the balance by five hundred US$ per month, you will still have accumulated $ 1,250 of interest during the 20 months it took to cancel the balance fifteen percent interest applied to an average daily balance of $ 5,000 in 12 months).
Alternatively, that person could accept a balance transfer offer of 21 months at zero percent interest with a balance transfer fee of three percent. In that case, this person’s previous balance of ten thousand US$ will be paid, while incurring a new balance of ten thousand US$ plus three hundred US$ in balance transfer fees. If everything goes according to plan, the cardholder will have saved almost $ 1,000 in interest.
A 0% balance transfer is not an instant solution to the credit card debt problem, You should think of these offers as the best opportunity, but you will still have to do most of the work for yourself.
The best 0% balance transfer cards in the market
We are fortunate to have an extremely competitive market for credit cards with a 0% balance transfer. None of these cards have annual fees. These are the best deals currently available.
List of best balance transfer credit cards 2020
|BankAmericard Credit Card||⭐⭐⭐⭐⭐|
|Citi Simplicity Card||⭐⭐⭐⭐⭐|
Best Balance Transfer Credit Cards 2020: BankAmericard
The Bank Americard credit card offers zero percent APR for fifteen billing cycles, the 1 of the longest periods offered by credit cards. These rates apply to balance transfers made within the first sixty days of opening your credit card account; After that, there is a standard APR for purchases and balance transfers: 12.99% -22.99% variable. There is also a $ 0 initial balance transfer fee during the first 60 days of account opening. After this, the rate for future balance transfers is three percent (minimum of $ 10).
Best Balance Transfer Credit Cards 2020: Chase Slate
The Chase Slate credit card is the card that is designed for balance transfers. Obtain APR of 0% for fifteen months. After that, a variable APR of sixteen percent to 25 percent is applied. What makes this card special is an initial zero balance transfer fee when you transfer a balance during the first 60 days of account opening. Then, the rate for future transactions is five percent of the amount transferred, with a minimum of five US$. So, this is a great offer if you need a credit card to transfer a balance and get a fifteen-month interest relief.
Best Balance Transfer Credit Cards 2020: Citi Simplicity
The Citi Simplicity card: no late payment charges. It offers zero percent APR for 21 months in both balance transfers and new purchases (that’s a long time). Then, the annual percentage rate of regular balance transfer will be fifteen percent to 25 percent (variable), depending on your credit. There is a balance transfer fee of five US$ or three percent (whichever is greater). Simplicity does not have any money or point return program, but does not offer late fees or punitive interest rates, and includes exclusive services.
Best Balance Transfer Credit Cards 2020: Bank of America Cash Rewards
The credit card offers an introductory 0% APR for twelve billing cycles in the first sixty days, then fourteen percent to twenty-four percent variable APR. There is a three percent fee ($ 10 minimum) that applies to balance transfers. The three percent cash reimbursement for gasoline is among the highest available, and you earn two percent at grocery stores and wholesale clubs (for the first $ 2,500 in combined grocery purchases / wholesale gas stores every quarter).
Best Balance Transfer Credit Cards 2020: HSBC-Gold Mastercard
It offers you an introductory annual percentage rate (APR) of zero percent for balance transfers and purchases during the first 18 months of opening the account. After that, a variable APR of twelve percent to sixteen percent or 20 percent will be applied. This card also does not have APR for penalty and an exemption for late payment. There are also no transaction fees abroad or an annual fee.
Low-interest credit cards for long-term debt
Here another option to save money, if you have a large debt, is to transfer the balance to a low-interest credit card. This option is very attractive if you cannot pay the full balance within the 0% APR introduction period of the previous cards. For more information, please read these articles:
Safety Guide for credit card transfer money:
Scammers often send us emails asking us about the feasibility of transferring a balance or balance from one credit card to another that offers a lower interest rate in relation to what they are paying. That is people who already carry a credit card debt.
What is a balance transfer or balance? It is the possibility that some banks give us to move the debt of a credit card from another institution, or even of it, to a card where we have enough limit. But generally, this offer is accompanied by an interest rate (the bank’s profit) lower than what we would be paying.
In principle, it sounds interesting; we stop paying more interest to pay less. What does happen is that these tempting offers, even at 0% interest are limited in time, that is, they are not permanent? These balances can be transferred at the promotional interest rate for 6, 9, 12, 15, 18 or 24 months. I have not seen in any country an offer of this type that exceeds 24 months.
Another issue to consider is that transfers are not free, even if they offer us an annual interest rate of 0%. We will be charged a commission for making the transfer, which is between 1% and 5%, but maybe even higher depending on the financial market and the offer. That is, if we transfer $ 10,000 at 0% for twelve months, when transferring the balance we will be charged the cost of the transfer, say 5% of the amount, that is $ 500. This should have been incorporated into the total cost beyond being offered 0%.
The dangers of balance transfers
We are talking about a situation that is unmanageable at first because if we accumulate enough debt, we are likely to be in a situation where we cannot handle it. Now, how do we get there in the first place? How much do we have the ability to repay it in the short term? We must be extremely strict in order to achieve such a goal, and humans are not just very trustworthy with ourselves in those aspects.
The dangers are not few or slight. There will always be situations in which it would merit having to resort to a movement like this, but if the need comes from an accumulation of debt without a brake on the horizon, we are clearly not prepared to handle credit products freely.
Responsible use of balance transfers
There are some situations that we can consider as responsible use of balance transfers or balances. That is to say, that when some situations have arrived, using or taking advantage of this offer can help us get out of a difficult situation.
- If we use the balance transfer, we should not put purchases on the same card as we mix two different interest rate types.
- There may be times of emergencies in which to use balance checks, the balance directly deposited at the time in our account or the transfer can be very useful.
- When the opportunity cost of using the money is now much higher than waiting to have it all together or lose it (an advance of investing in a business when we receive the money in 2 months).
- Use the credit card balance transfer when the debt is less, and when to repay it, we must not include more than 15% of our monthly income to complete it in less than 1 year.
- In cases where the difference between paying the credit card fee and ending the payment of the debt early with a balance transfer saves us at least 50% of the interest.
- There are edges in everything we live, and this issue was no exception. We believe in the responsible use of financial articles and their products. If our problem is a system of chronic consumer debt, transferring a balance will be another step towards the abyss, since the root of the situation is the lack of financial responsibility.
- Those who have the power to control themselves and act financially in a responsible manner are able to move with these types of devices when it is necessary to do so without putting at risk everything they have built. Transferring a balance or balance can fall like a double-edged sword.
- Please be responsible for personal finance!