For consumers bloated with debt from perhaps indulging in a little more holiday spending than they could immediately afford, a balance transfer credit card with a 0% APR program is often times a phenomenal tool available to alleviate this pain. Credit card companies know this all too well and typically, around this time of year, come out with these very enticing offers. But which balance transfer credit card allows consumers to save the most money while truly assisting them in eliminating or at least heavily alleviating their debt?
Your first option would be to find a card with an extended 0% intro APR option. The longest term we’ve ever come across has been a 21 month 0% APR card from both Discover and Citibank. Fortunately for consumers in the market for these types of cards there are several 21 month 0% APR cards still on the market. Visit our balance transfer credit card marketplace to compare all the features of these cards as well as any promotional offers.
Now on to our favorite type of balance transfer card – the no balance transfer fee credit card.
These types of cards are always promotional offers that never last more than a few weeks. And we generally see them come around right after the new year. There is one still available through the end of this month in which we covered in an earlier article. However, for those that may have missed the offer it can be found using the link below (or read our review here).
Here are some quick highlights of the card:
1) No Balance Transfer Fee. (Only if you sign up before Jan 31.)
2) 0% Intro APR on both balance transfers and purchases for 12 months.
3) 5% cash back in a rotating set of everyday type categories (gas, groceries, etc).
4) 20% cash back when you shop online through the Discover website.
No let’s further examine how valuable these “no balance transfer fee” cards really are and how much you can potentially save by transferring your existing debt to one of them.
First, the average balance transfer fee is between 3% and 5% for ALL balance transfer credit cards. Discover Bank is the only credit card issuer that we’ve seen waive this fee. Ever.
If you bank with a credit union and have an existing balance with another credit card outside of your credit union, you may want to see if they can provide a similar card as well if you’d prefer not to open a Discover Card, but we find it unlikely they have a similar offer.
Potential Savings with Discover Bank’s No Balance Transfer Fee Credit Card:
Assuming you have $1,000 in credit card debt and transfer it to a 0% APR balance transfer card you would be saving $50 assuming a 5% balance transfer fee.
5% x $1,000 = $50 in savings
Now assume you have $5,000 in credit card debt and transferred it over to a 0% APR card. Your savings would then be a much more substantial $250 (again assuming a 5% BT fee).
5% x $5,000 = $250 in savings
Now let’s go further and assume you have a whopping $15,000 in credit card debt and need to transfer it immediately to a 0% APR card because you’re likely getting smothered with interest charges. In this more extreme example you would be saving an incredible $750 (assuming 5% BT fee).
5% x $15,000 = $750 in savings
When obtaining one of these cards it’s absolutely crucial that you budget your monthly payments so that the debt you’ve transferred can be fully paid off before the 0% intro APR period is over otherwise you will likely be hit with an APR between 10.99% and 19.99% depending on your credit standing. And although they allow the 0% APR to cover new purchases as well, we would highly recommend never using the card for purchases only as a tool to recover from suffocating credit card debt.
When ‘no balance transfer fee credit card promotions’ become available they never last long, so if you’ve wracked up somewhat of a high credit card debt and are stuck with an unfavorable APR, now is the time to transfer your balance and take advantage of the potential savings.