There are some no transfer fee credit cards, but there are always caveats, disclaimers, and conditions involved, so you need to be careful. The good news is that credit card companies really do want your business, so they often offer a variety of incentives to get you to transfer your balance to them. As with the offer of no balance transfer fee, it’s important to read the fine print on all incentives.
To do a credit card comparison and find the best balance transfer credit card for you, use the credit card finder.
Balance transfer cards are getting rarer in our current economy. Credit in general is being offered much more cautiously, so you really have to have a good credit rating to get a balance transfer credit card, particularly one with no fees and good incentives. One way to keep an eye on your credit rating is to get a credit report from one of the big three credit reporting agencies, like TransUnion.
What sort of incentives do balance transfer credit cards offer?
In addition to no transfer fees, credit cards that transfer your balance often offer low introductory rates, sometimes even zero percent. The introductory rate can go up to two years, but then the rate can go up to anywhere between 9% to 20.99%. The Credit Card Act, which can be found in its entirety on the website of the Federal Reserve, set the minimum amount of time for an introductory rate at six months.
Other incentives that balance transfer cards can offer include cash back bonuses, no annual fees and no fee for additional cards. Why do they offer such nice perks? Because if you’re using a balance transfer card, you obviously run up big credit card bills, and that can equate to big interest payments to them down the line.
Is it possible to “play the game” and avoid interest payments?
The idea is to transfer a balance to a place that offers no fee and zero credit card interest, maybe pay it down a bit, then transfer to another card with the same offer each time the promotional period gets close to ending. There was a time when this was not only possible; it was a way of life for millions of credit card customers. Now, with tighter regulation and lenders being a little more careful about whom they offer credit to, it’s a bit more difficult, although still not impossible.
The risks of playing the balance transfer game can be bigger than the rewards, if you’re not careful. The biggest risk is that you could get caught holding a balance on a card past the introductory rate and get socked with a high interest charge. That risk is even higher nowadays as the credit market continues to tighten—there may come a day when credit cards no longer offer promotional rates for balance transfers. You could also miss the end of the promotional period due to a memory lapse, a check getting lost in the mail, or some other mishap.
Another thing to beware of when “floating” a balance between cards to get the promotional interest rate is that there are usually minimum payment requirements. If you don’t pay the right amount on time, the promotional period could be voided and the card could default to a higher rate immediately.
Having many credit card accounts open is usually a bad idea as it hurts your credit rating and increases the opportunities for a criminal to get a hold of one of your accounts and rack up fraudulent charges. Unfortunately, even if you close the old credit card after you open the new one, too much of that kind of activity will still hurt your credit rating.
Can you transfer a balance from another type of loan to a credit card?
In most cases, a balance transfer credit card will issue you a balance transfer check, which you can use in any way you want, including to pay off another loan like a car loan. You would not really want to do this unless you were sure you could pay off the entire amount of the loan before the promotional balance transfer rate expires, because the loan interest is probably much lower than the regular credit card interest.
If you don’t get a balance transfer check, you can still use a balance transfer card to pay off a loan; there’s just an extra step involved. First, use a normal bank credit card to pay off your loan, then transfer the balance from the first credit card to a balance transfer credit card with a promotional rate, preferable zero percent.
Back when money market accounts and CDs were paying big interest rates, people would actually use balance transfer cards to get free money for investing using the same tricks you would use to pay off a loan, but there’s not much value to doing that in the current economy.
Use the credit card chaser now to find the best card to suit your needs!
- Do no interest credit cards exist?
- What is the best deal on credit card rates?
- Are there any credit cards offering fixed rates of interest on transfers?
- Is there such a thing as credit cards with no transfer fee?
- How long do promotional credit card rates usually last?
- What happens with unused credit cards?
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