Zero. In many contexts, that sounds pretty great. Free stuff is what’s mostly associated with the number. That’s why it’s quite understandable that zero percent balance-transfer credit cards can seem so enticing. These offers allow you to move a balance from a credit card that charges interest to a card that doesn’t. Not a bad deal, right? Sure seems that way. But before leaping at an offer, read the fine print and calculate the costs like the rate offered as well as transfer fees or minimum loyalty payments. Here’s a good place to start.
Introducing…
Introductory interest rates are generally incentivized through a low percentage rate. These appeal to many people because they are significantly discounted when compared to standard offers. Research any penalties related to late payments as well. That’s because introductory rates may only apply if you pay on time. Don’t let fine print like that hurt you after switching cards. So do your homework and plan ahead.
Timing is Everything
The length of the introductory period – the duration the introductory interest rate is offered – is also key to finding which card is right for you. They typically range from a minimum of 6 months to sometimes as long as 2 years. If you are trying to eliminate debt from a previous credit card, consider how long the offer lasts when assessing its pros and cons.
After the Honeymoon
No matter how attractive an introductory rate appears, be sure and find out the Annual Percentage Rate (APR) to determine if it’s worth it. That number matters because if it’s high, it could negate the introductory rate’s initial appeal.
Transfer Fee
Factor in the card’s balance transfer fee before you switch too. Standard fees are around 3%. The good news is that the balance transfer fee can be negotiable. Although that’s not always the case, it’s smart to find out.
Bare Minimum
The minimum loyalty payment is another important indicator of a balance transfer credit card. This will give you a good idea of what the card requires in the long run.
What are your perceptions of balance transfer credit cards? The good and yes, the bad. Tell us in the comment section below.
Comment on this article
Comments
Glenn on January 13, 2016 at 10:42am
Pretty ironic that the graphic in this article shows a purple credit card with a security chip, yet Ally Bank STILL doesn't offer a bank card with enhanced security. How is it that a online only bank that so relies on technology to function, is so far behind hundreds of other financial institutions in implementing newer and proven safer technology???
George W. on September 20, 2017 at 9:34pm
Article answered all my questions.
Ally on October 5, 2017 at 5:45am
We’re glad to hear that, George! Thanks for reading the blog.
Karen A. on July 23, 2018 at 6:26pm
How come Ally.com doesn't provide the ability to apply for a balance transfer via their website??
Ally on August 15, 2018 at 12:07pm
Hi Karen, we'll pass your interest for this feature along to the team. Please give us a call at 1-888-916-2559 if you need any assistance.
Jeanne L. on November 22, 2018 at 12:24am
My husband and I are getting ready to purchase a home. I have had to use two of my credit cards to pay for therapy classes for our son and to buy his medicines and clothes after our FSA ran out. Now I am getting nervous because these two credit cards are pretty high interest, should I apply to condense the cards and lower the interest rate? I know that mortgage companies look at all of that.
brenda j. on January 11, 2020 at 9:09am
don't look good on your credit
Khang T. on July 29, 2021 at 12:07am
Yes