5 Ways to Tell if a Balance Transfer Is Right for You

If you have one or more high-interest credit card or loan balances, you may be a good candidate for a balance transfer credit card. Most balance transfer cards offer either an introductory 0% APR or another low-interest rate during a promotional period for anywhere from six months up to 18 months.

The introductory APR allows you to save big bucks on interest while you work towards paying off the transferred balance. For example, let’s say you have a credit card with a 16.99% APR and a balance of $5,000. If you continue making monthly payments of $350 on that card, you can pay the balance off in about 16 months, but you’ll also pay more than $500 in interest.

On the other hand, if you transfer the balance to a credit card with an introductory 0% APR on balance transfers, you’ll probably have to pay a 1% fee ($50 to $150) on the balance, but you can pay the balance off with $350 monthly payments in just under 15 months without paying any interest, potentially saving $350.

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1. You have good credit

Most balance transfer credit cards with an introductory 0% APR for several months are for people with good to excellent credit. However, that doesn’t necessarily mean you won’t be approved for a balance transfer card if you have only “fair” credit.

You may still get approved for a balance transfer credit card with fair credit, but it probably won’t offer that sweet 0% APR. Instead, you’ll pay a higher APR that may cancel out any benefits you’d otherwise get by transferring a balance to the new card.

Find out: 5 Smart Ways to Use a Credit Card

2. You have multiple credit card balances

Keeping track of multiple credit card due dates isn’t just stressful. It’s also a situation that can lead to paying late and incurring late fees when you forget a payment due date.

If you’ll save more on interest with the balance transfer card than you’ll pay in balance transfer fees for multiple balances, putting them on one credit card with a low or 0% APR for a year or 18 months means you’ll have only one credit card due date.

Find out: Should You Transfer Balances to No-Interest Credit Cards Multiple Times? 

3. You have a high amount of debt

If you’ve racked up thousands of dollars of debt on one or more high-interest credit cards, it can make sense to transfer credit card or loan balances to a new balance transfer card with an introductory 0% APR for a year or longer. That way, all your payments go directly to the balance without having to pay interest.

Before you apply for a balance transfer card, however, figure out how much you’ll pay for the balance transfer fee, which is typically 3% of the balance transferred. If you’ll save more on interest than you will pay for the balance transfer fee, transferring a balance could be a smart move. Just make sure you pay off the balance before the intro period ends and the APR jumps to a less manageable interest rate.

Find out: How to Consolidate Credit Card Debt on Your Own

4. You make timely payments

If you have a pattern of making late payments, a balance transfer card offer could backfire if you’re not careful. That’s because with some cards offering a 0% APR or other low introductory interest rate on balance transfers, making a late payment could cancel out that intro rate and bump you to a much higher interest rate going forward.

Find out: Is Paying Off Credit Cards With Other Credit Cards a Good Idea?

5. You’re determined to pay off the balance

Transferring a large balance (or more than one balance) to an introductory 0% APR credit card can take a huge weight off your shoulders. After all, now that you’re not paying a huge chunk for interest each month, you can really hit that debt to get rid of it faster.

Don’t get too comfortable, however. The whole point of transferring the balance is to pay off before the introductory period ends so you don’t have to start paying high interest on the remaining balance on the new credit card, too. Set a goal to pay off the transferred balance before the promotional period ends.

Then don’t charge any purchases on the card, even if the 0% APR offer is also for new purchases. The last thing you need is another big credit card balance in your life, so focus on paying off the transferred balance as soon as possible, or at least before the intro offer ends.