NerdWallet’s Best Balance Transfer Credit Cards, Fall 2011 Edition
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A balance transfer credit card is a great way to consolidate your debts and pay them down interest-free for a period of time. For example, let’s say you have $3,000 of credit card debt on 3 different cards that accrues 15% interest. If you transferred that debt to a balance transfer credit card that gave 0% interest for 12 months and paid off your $3,000 debt in that time, you’d save $450! It’s not all good news, however – you usually have to pay a balance transfer fee (the industry standard is 5%, though some charge 3% and others waive it altogether) and after the promotional period ends, you’ll be charged a higher APR. Still, you get the chance to pay down your debt without paying any interest at all, in some cases for nearly two years!
Our top balance transfer picks:
- Citi Simplicity: 18 months: No late or annual fees, no penalty APR
- Discover More: 18 months: Earns 5% cash back on bonus categories
- Citi® Dividend World MasterCard® – $100 Cash Back: 12 months: Earns 5% cash back on bonus categories, $100 signup bonus
- Citi Forward® Card for College Students: 12 months: Earns 5% back on typical college purchases
When evaluating balance transfer cards, we consider the length of the 0% promotional APR period, the ongoing APR, and the balance transfer fee. Always remember to consider the transfer fee, as paying 5% to transfer debt that you’ll pay off in three months is pretty unhelpful. Still, the best balance transfer cards can offer a great value, especially if you’re struggling with debt. Read on for why we like them…
Longest introductory APR period: Citi Simplicity
The Citi Simplicity offers the longest 0% balance transfer APRs out there. It charges no interest on purchases or transfers for 18 months, well more than the standard 12. What’s more, the balance transfer fee is only 3% instead of the standard 5%, so you’re saving a substantial bit of money in both cases. But one thing sets the Simplicity apart from the other 18-month cards: it has no late fee and no penalty interest rate. If you’re nervous about paying your bills on time, the Simplicity’s got you covered.
On top of that, it has no annual fee and a low ongoing APR (minimum 12.99%, maximum 21.99%. All rates are variable and current as of September 15th, 2011). These are great cards if you’ll need a long time to pay off your debts. Though they don’t earn rewards, they do give you the most time to pay off your debts.
Best rewards + balance transfer combination: Discover More & Dividend
The Discover More and Citi Dividend World MasterCard share the podium on this one, because the More offers a slightly longer balance transfer period, but the Dividend gives better rewards, in our opinion.
The Discover More has no interest on balance transfers for 18 months and purchases for 6. It’s the same deal as the Simplicity, Diamond Preferred and Platinum Select. Plus, unlike the Big Three, the Discover More actually gives rewards. Let’s start with the fees: no annual fee, low 3% transfer fee, lower-than-usual 2% foreign transaction fee. Now, on to the rewards: the More gives 5% cash back in bonus categories that change quarterly, up to a cap that also varies quarterly. On top of that, you earn 0.25% cash back on every other dollar you spend up to $3,000 a year, and 1% cash back thereafter. It’s a pretty solid offer, especially considering that it lets you pay off your debts and get a little something back.
The Citi® Dividend World MasterCard® – $100 Cash Back (that’s quite a mouthful) has a slightly shorter 0% APR period, offering no interest on both purchases and transfers for 12 months*. However, we think it’s got a better rewards program than the Discover More, and here’s why. First off, you get $100 cash back when you spend $500 in your first 3 months. Past that, you earn 5% back on rotating bonus categories, just like the More, but you get 1% back elsewhere on every dollar you spend, with no spending threshold. Keep in mind, though, that your total rewards are capped at $300/year (not including the $100 cash back bonus). Like the other cards mentioned, the Dividend has no annual fee* and a low 3% balance transfer fee.
Best offer for students: the Citi Forward® Card for College Students
The Citi Forward® Card for College Students has no purchase APR for 7 months*. Its balance transfer fee, like the Diamond Preferred and Platinum Select, is only 3%, which is lower than most, and it has no annual fee. Best of all, it also has rewards: you earn 5 Citi ThankYou Points per $1 spent on restaurants, music, movies and bookstores (which includes Amazon.com, campus bookstores, fast food, etc.) as well as 1 point per $1 spent elsewhere. You’re rewarded for paying on time: if you stay under your credit limit and pay on time for 3 billing periods in a row, your APR can fall by up to 2%, and you also get bonus points for being good. The Forward actually offers the best deal for students both in terms of rewards and 0% intro periods – it’s hard to top that offer.