Balance-transfer credit cards are designed to get you out of debt. You can use them to move a balance from a credit card with a high interest rate to one that temporarily charges no interest, providing you with a window of time to focus on getting out of the red.
Most of these cards have balance transfer fees of 3 to 5 percent. So if you transferred $5,000 to a card with a 3 percent fee, you would be charged $150.
But you can find cards that offer lengthy no-interest periods and don’t charge this fee, helping you pay off modest debt levels faster and cheaper than you could otherwise.
To determine which credit cards are the best for getting out of debt overall, CNBC Make It compiled a list of 25 highly rated cards with no-interest offers and low annual percentage rates. We estimated how long it would take to pay off a range of debts at different rates, as well as how much interest you’d pay with each card. We also considered rewards and other perks, and downsides such as late fees and penalty interest rates.
While the U.S. Bank Visa Platinum card was our No. 1 choice for the best balance-transfer card overall, our runner-up was the best choice among cards with no balance transfer fees.
If you transferred a balance onto the card and paid it off within that no-interest introductory period, you’d have to pay only the cost of your balance, without any extra interest or fees.
For those paying off relatively modest levels of debt, or less than $5,000, this card may be the best choice. On the other hand, if you expect to be in debt for a while after that introductory period ends, you’re probably better off going with a card with a longer no-interest period. It may seem counterintuitive, since the larger your debt, the larger the balance transfer fee. But a large fee is usually worth paying if you need more time to get rid of your balance.
This chart shows how the EveryDay compares to cards that do charge a balance transfer fee across different levels of debt. The estimates are based on average APRs within each card’s range. For example, the EveryDay’s estimates are based on an APR of 20.24 percent.
The Chase Slate is another card that offers no balance transfer fee, plus no penalty APR, meaning your interest rate won’t increase if you pay late. But the Slate has a slightly higher variable APR after the introductory period and doesn’t offer any rewards.
The Barclaycard Ring Mastercard, meanwhile, doesn’t have a balance transfer fee after the first 45 days of account opening. The downside: If you want 12 months of no interest, you need to transfer your balance within the first 45 days. In other words, you can’t have both a no-fee and a no-interest period. But this is a great choice for those who need to make repeated balance transfers over time, something you can’t do with Chase Slate or the EveryDay.
- Introduction period: 0 percent on purchases and balance transfers for 15 months
- Variable APR: 14.74 to 25.74 percent based on your creditworthiness
- Balance transfer fee: 0 percent for first 60 days
- Rewards: 2X points at supermarkets on up to $6,000 in purchases
- Annual fee: $0
- Bonus: 10,000 points if you spend $1,000 in first three months
- Notable perks: Use your card 20 times in a month and get a 20 percent point bonus
How we decided
To determine which credit cards are best for getting out of debt, CNBC Make It compiled a list of 25 highly rated cards, most of which are recognized as balance-transfer cards. Others are considered cash-back cards first but still have features that help users get out of debt. We vetted each card based on its reward offers, introductory and eventual APR, annual fee, bonus, recommended credit score, late fee, balance transfer fee, foreign transaction fee, redemption rates, transfer options, customer reviews and extra perks.
We then estimated how long it would take and how much it would cost for each card user to pay off various levels of debt — $2,500, $5,000, $7,500 and $10,000 — at different monthly payment rates, including $100, $200, $300 and $400. For each card, we also note how much it would cost, in interest and fees, to pay off $2,500 in one year, $5,000 in two years, $7,500 in three years and $10,000 in four years.
The estimates depend on introductory APR periods, interest rates thereafter, the balance transfer fee and rewards. The figures are ranged based on the variable APR you might qualify for, which, like your credit limit, is determined by your creditworthiness. We also considered each card’s reward structure to determine its overall value, since cash back becomes accessible after users pay off enough of their balance and have credit available.
In short, each credit card was evaluated based on how quickly and efficiently it can help users get out of debt, its extra perks and its long-term value. For more details about how balance-transfer cards work and how we decided on the best, check out our full list.
Article seen on CNBC, written by Yoni Blumberg