NerdWallet’s Best Balance Transfer Credit Cards, Spring 2012 Edition

Debt sucks. I think we can all agree. That’s why the balance transfer credit card was invented. It won’t eliminate your debt, but it will temporarily freeze your interest rate, preventing you from plunging deeper into the abyss. Let’s say, hypothetically, you hold 3 credit cards, each with a 15% APR. Unfortunately, a devastating combination of unforeseen circumstances and shiny new toys landed you $3,000 in debt. By obtaining a balance transfer credit card, you can consolidate your debt to a single piece of plastic and stop incurring interest for specified amount of time. If your transfer card offers a 0% APR for 12 months, transferring could save you $450 if you pay off your debt within the year. One caveat when considering a balance transfer card: transferring debt is rarely free. Oftentimes, you’ll need to pay a balance transfer fee. Typically, the fee will be 3% or 5% of the desired transfer. But in the long run, it can be well worth your while. Also, many balance transfer cards charge a steep APR once the intro period has expired. If you’re going the transfer route, make an honest effort to pay off your debts before the ongoing APR kicks in. By doing so, you’ll save yourself a substantial chunk of money by dodging wearisome interest rates.

Our top balance transfer picks:

• Citi Simplicity: 18 months: No late or annual fees, no penalty APR
• Discover More: 15 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: 7 months: Earns 5% back on typical college purchases

A few essential components are indicators of a worthwhile balance transfer card. Be sure to consider the balance transfer fee, the duration of the 0% APR promo period and  the ongoing APR. Always to look at the balance transfer fee–we know it can be easy to forget. Even with a low APR and long intro period, a steep balance transfer fee could sour your efforts. Finding the proper combination of these elements will go great lengths alleviate the burden of debt.

Longest introductory APR period: Citi Simplicity

 If you’re looking for the longest 0% APR available, the Citi Simplicity is your go-to card. Created specifically for folks in dire need of debt relief, the Simplicity grants a full 18 months of 0% transfer and purchase APR to get you back on track. You have the better part of 2 years to pay down debt without accumulating further interest. To make the offer even more tantalizing, the balance transfer fee is only 3% (the standard is 5%). Moving your balance won’t be too painful. That’s all fine and dandy, but check this out. The Simplicity, unlike its competitors, does not charge late fees or penalty interest rates. Citi understands making payments on time isn’t always easy and in some cases impossible. If credit cards are a constant struggle, the Simplicity will restore your faith in plastic payment.

Best rewards + balance transfer combination: Discover More & Dividend

We had a tough time choosing a clear-cut winner for this category. So we didn’t! We selected 2 and called it a tie. While the Discover More offers a longer balance transfer period, the Citi Dividend World MasterCard delivers superior rewards. They are both great choices, and which you choose will depend on preference and personal needs.

With 15 interest-free months on purchases and balance transfers, the Discover More boasts one of the world’s longest intro APRs. Like the Simplicity, the More has no annual fee and a 3% balance transfer fee. Like all Discover cards, the More has no foreign transaction fee, saving you 3% on every out-of-country purchase. But our favorite part is the rewards program it offers in addition to its low-fee perks. Rotating categories earn 5% cash back in areas like entertainment, gas and groceries. Purchases that do not qualify for the accelerated rate earn .25% cash back for the first $3,000 spent annually. After $3k, the rate bumps up to a full 1%. The 5%  rewards are capped according to to category, but the 1% is unlimited once you cross the $3,000 threshold. Only a few card allow you earn rewards while simultaneous fighting debt. The More breaks the mold with its unique set of attributes.

Another balance transfer card equipped with rewards is the Citi Dividend World MasterCard. The intro period is a tad shorter at 12 months, but it’s still far above the average. Though not quite as ideal for transfers as the Discover More, the Dividend’s rewards programs makes it a strong contender. In addition to the $100 cash signing bonus (when you charge $500 within the first 3 months), you earn cash back in 5% rotating categories (just like the More). But unlike the More, all other purchases qualify for a full 1% cash back right off the bat. You don’t have to meet a specified threshold to get there. The only downside is the rewards are capped at $300 a year. Big spenders might want to consider an alternative rewards option, but most people needn’t worry about the cap. Again, the Dividend has no annual fee and a low 3% balance transfer fee. To determine which card–the More or the Dividend–is right for you, consider how much time you’ll need to pay down your debts. If you can do it in 12 months, the Dividend will provide better rewards. But if you could use a few extra months, go with the More for a longer intro period with lower rewards.

Best offer for students: the Citi Forward® Card for College Students

The Citi Forward for College Students does not offer a balance transfer intro period, but it does come with 7 months of 0% purchase APR and a 3% balance transfer fee. You can lower your APR by up to 2% by paying on time and staying under your spending limits. Its rewards program is crafted with student spending habits in mind. Dining, movie, music and book purchases earn 5% back–these categories include fast food, most bars, campus bookstores and Amazon.com (which falls under the “bookstore” category). Rewards are capped at 75,000 Thank You points annually, but that’s a fairly high ceiling and won’t affect most students. There aren’t too many balance transfer student cards out there, but if you could use temporary reprieve from purchase APR while participating in a worthwhile student rewards program, the Citi Forward will serve you well.