Balance Transfer Credit Cards to Keep You Balanced

A great mind once said, “The handy thing about credit cards is they’re a great way to pay off your credit cards.” We have no idea who said it but we can all agree it turns out to be very true. No wonder why it’s quoted so much. But let’s see how balance transfer credit cards fit into this nice quote and how you can use them to figure out your credit card debt.

Balance Transfer Credit Cards Defined

A balance transfer credit card allows you to transfer existing credit card or loan balances to another credit card. Typically, you include the financial details of the credit card or loan balance you want to consolidate or transfer, such as the account number(s), financial institution and transfer amount.

Along with the interest rate and potential fees, you will also need to examine the end date for the promotional period, potential rewards, cash back options, annual fee amounts and any sign-up bonuses. The ideal balance transfer credit card provides a promotional period long enough to enable you to pay off your transferred balance under the zero percent interest rate. Once the regular interest rate begins, you need to already have the transferred balance paid off. If the post-promotional interest rate is high, especially higher than your current credit card, you really need to pay that sucker off before the promotional period ends.

Credit Card Comparison: Balance Transfer Credit Cards

Let’s assume you need a balance transfer card because you only owe $1,000, but the 23 percent interest rate you got because of your poor credit rating adds way too much to the principal. You can compare credit cards on Loanry to find the best balance transfer credit cards for you.

You really need to shop around for the right balance transfer credit card to pay you’re your high-interest debt. And you must pay attention to the details to ensure you fully qualify for a promotional interest rate, plus you understand the terms you must meet to keep the promotional interest rate.

Read the fine print. Balance transfer credit cards typically have some fees attached and they may not turn out to be as cheap as you first think.

Consolidation Loans vs. Balance Transfer Credit Cards

That fact can also be true, but you have to do it right. Sometimes, you waffle between using personal loan consolidation and using balance transfer credit cards to decrease the amount you owe to credit card companies. Either of those options can reduce the principal owed, but consolidation loans tend to do it more quickly.

A consolidation loan lets you pay off all the original creditors, while negotiating a lower interest rate. It provides the funds to pay off all of the original creditors and leaves you with only one payment per month. While many credit cards in your wallet may have interest rates approaching or greater than 20 percent, you can typically land a consolidation loan with a reasonable interest rate of 10 to 15 percent.

The downside of these loans is that they tend to require a large debt for you to qualify. If you only owe two or three thousand dollars, balance transfer credit cards make a better choice. You might not get the same amazing interest rate, but you can do pretty well, plus you may land a six- to twelve-month zero interest rate.

The Balance Transfer Credit Cards Cycle Trap

I’m going to be honest with you speaking as somebody who in undergraduate opened about five or six credit cards and tried everything to pay them off. My first option was third job. My second option was balance transfer credit cards. And my third option was a consolidation loan. I’m happy to speak to you from experience that the combination of the three things worked. It took a few years, but it all got paid off and I now love living life with no credit cards. Yes, I am serious. I am also the only person I know who has none.

The danger of using balance transfer credit cards is that if something goes wrong and you cannot pay off the transferred balance, you either get stuck with a ridiculously high interest rate after the promotional period and existing debt or you have to take out another balance transfer credit card to send the balance to so you can get another zero percent interest rate to extend your payback.

I ended up with two balance transfer cards after the third job did not help me enough to kill off my original balance. I was really determined to live life debt free though. While it took consolidating my accounts to pay them off, you can benefit from my mistakes. Trust me on this one, when you see your initial credit card balance growing, either take another job so you earn more to pay it off or get the balance transfer credit card right then. Do whatever it takes to pay the sucker off on the very first promotional period. Do not add to the balance of either card. Transfer the balance and stop using the original card. Do not add to the new card either.

The trick of getting out the debt hole is to stop using credit. Live within your means. The definition of “your means” is the amount you earn each month plus your savings, your investments’ dividends and the amount in your checking. That needs to cover all of your expenses – your monthly budgeted items and the little extras like vacation.

Using balance transfer credit cards can help you get to the point of paying everything off, but you have to use them judiciously.

Obtaining Balance Transfer Credit Cards

If you get approved for the balance transfer credit card, the new bank or financial institution takes care of transferring the credit card balance to your new credit card. Other banks have you phone them or go on the Internet to transfer your balance after you receive the new credit card. You might get approved for an amount lower than the balance of the original credit card. If that occurs, you will only be able to transfer part of that debt.

Buyer Beware: Not all credit cards allow balance transfers. Carefully read the credit card offer.

Caveats of Balance Transfer Credit Cards

Many of these balance transfer credit cards include fees for using the balance transfer option. Typically, this fee gets automatically added to your balance when you transfer it. Other lenders add the fee after 60 days or more have passed. The lower the fee, the better. These fees usually range between three to five percent of your transferred balance.

Most lenders limit the transfer amount. This caps the transfer balance amount and generally ranges between $5,000 to $15,000. Most cards only let you transfer a balance once when you first obtain the card. A few let you add new credit card transfers later.

One of the qualifying items for obtaining these cards is you need to be up on your payments to the other cards. If you get behind on payments to another card, you probably won’t get a balance transfer credit card.

Even if your credit card offers cash back and/or rewards, you won’t earn these on balances you’ve transferred. Those only occur when you make new charges or purchases (which you really do not want to do).

Also, just so you know, you usually can’t open a balance transfer credit card with the same lender with which you have a different credit card. These are a little tough to qualify for since you typically need a credit score of more than 700 and timely payments.

There’s also the time factor. You can get a consolidation loan much faster. A balance transfer credit card can take days to weeks to process the transfer. You need to continue making your timely monthly payments on the existing credit card until it shows a zero balance, meaning that the transfer to the new card occurred. You need to make all payments on time. Carefully monitor your billing statements.

You really must make all of your payments on time because some lenders cancel your whole balance transfer agreement if you make a late payment.

Do not make purchases on the new balance transfer credit cards.

You need to quickly pay off the transferred balance. Adding new purchases just gives you more to pay off. Back to living within your means. You have to learn to do that. Create a budget. Stick to it. How do you do that you ask?

Budgeting and Balance Transfer Credit Cards

You need a budget. This was a major key step for me to eradicate many credit card bills. You first gather pertinent information so you can calculate your monthly income.

Use hard numbers. Include your main salary or wage job and any side gig income. Factor in money from completing surveys, doing odd jobs, etc.

Do not guess. Calculate a mathematical estimate. Use logical numbers that you have past experience earning. No assumptions. Do the math, so you can actually know what you have coming into your bank account. Budget on an average of your income of twelve months.

Here’s a tiny warning. The next step hurts. Calculate your monthly expenses. You will probably be really shocked when you actually write down every single, solitary thing you spend money on in a calendar month.

Start with your rent or mortgage payment. Add your utilities – electric, gas, water, trash, – car payment, car insurance, gas, groceries, motor oil, fitness center membership, cable or satellite, cell phone, dining out, credit cards, loans and savings. Haul out your checkbook, PayPal account statements, credit card statements and bank statements to examine closely where you spent your money for an entire twelve month period.

You do this both to create an accurate set of expenses and to catch the one or two semi-annual or annual expenses you have. You may pay a mortgage every month, but your property taxes and property owner’s association dues once per year.

Depending on your personal situation, you may have more than the above expenses to include, such as:

  • clothes,
  • school supplies,
  • household sundries like lightbulbs and cleaning materials,
  • pet supplies and pet care,
  • home or car repairs and maintenance,
  • medical and dental bills,
  • online purchases/shopping,
  • entertainment,
  • online subscriptions,
  • child support and alimony,
  • your children’s allowances,
  • gifts for birthdays, holidays and weddings,
  • church tithes and charity donations.

The next fun part is prioritizing your expenses. You need to divide things into categories that divide expenses into negotiable and non-negotiable expenses. One Budgetry writer suggests these for “Non-Negotiables”:

  1. rent and car payments,
  2. credit cards and utilities.

Things like groceries, gas, clothing and savings fall into the “important” category. You really cannot do without them, but if you had to you could totally reduce them or cut them out except food. You could walk to work and errands. Certainly no person needs new clothes every month. You do need to save money every month, but if you had to miss a month, you could.

The optional category is full of things people think that they really need, but you could absolutely do without. These include cable or satellite television, high-speed Internet and their cell phone plan. You can cut the cord to TV and choose between high-speed Internet and the cell phone with a data plan. Pre-paid plans typically cost less. The completely negotiable, therefore unneeded, items include entertainment and shopping. You do need to have money set aside for medical expenses and repairs to your car or home.

Your credit cards qualify as non-negotiable because you have to make at least the minimum payments each month in order to keep your credit score healthy. You need to make the higher than minimum payments when possible. Only by doing this will you ever qualify for a balance transfer credit card to help eradicate your debt.

Reducing Your Expenses

Trust me, if you have hit the point where you actually need a balance transfer credit card, you have hit the point that you need to reduce your expenses. You need to prioritize expenses to dig yourself out of that hole. You might have to cut things out that you currently purchase. That does not mean doing without. It means cutting down on your consumption of the item or replacing it with something else. Try these ideas to save money.

I admit to a total love of Starbucks and an affinity for pumpkin spice lattes. (Not one word about how basic that seems.) I could drink one a day. That would cost about $35 per week. However, the sweet folks at Starbucks released pumpkin spice latte K-cups this year. I bought those suckers and yum. A pack of nine or 18 costs a tiny fraction of the coffee shop version. The taste is the same, but a nine pack costs $11.99. That shaves off $23 per week. Look at that $100 I freed up in my monthly budget.

Save on ATM fees by pulling out cash at bank. Visit the teller window.

Cut the cord to your cable or satellite TV plan. At least reduce your plan level. Make a complete list of every show you watched all the way through for one week. No cheating. You have to watch it start to finish. Now, make a list of the channels on which those shows played. It is probably five or less.

Check the list of plans your provider offers. You can probably reduce the tier of service to which you subscribe. You’ll save about $20 typically.

Okay, if you like one of the premium channels like HBO, you can still reduce your tier and still watch it. You just purchase HBO online as a standalone station. You stream your shows on your TV, computer and tablet. It costs $14.95 per month.

You could cut the cord totally and use the free version of Vudu and $5.95 per month Hulu to access a multitude of entertainment options. Other options include Amazon Prime Video or Netflix. You save about $50 per month.

Switch to a more reasonable cell phone plan. Shop around for a new carrier, especially if you have a pre-paid plan or your contract expiration is coming up. You can stick with your carrier, but study all of the plans offered. You can typically reduce only the amount of high-speed. That could save you about $20 per month.

How to cut back on various types of expenses

Budgeting the Balance Transfer Credit Cards

This is not the same thing as budgeting your expenses every month. You need to budget the card’s payments all the way through the repayment. Do this for each card you examine before applying for any.

Credit card interest rates and the promotional period can make all the difference. One card may give you a six month zero interest period, then transition to a 15 percent interest rate. Another card might give you a one year zero interest rate, but jump to a 25 percent interest rate afterward. You need to determine which one actually costs you less and how much the card will cost you each month. Also, calculate the transfer fee on each and add that to it. You will find the best balance transfer credit cards this way.

Also, examine the pay off costs of a regular credit card with that has a lower ongoing interest rate. That could turn out to be the least cost scenario.

Other Reasons to Obtain Balance Transfer Credit Cards

Growing debt isn’t the only reason to obtain a transfer balance credit card. You may have grown unhappy with your current credit card company. Before 2009, your credit card company could spring changes on you randomly. They could raise your interest rates or tack on fees or something else, but in May of 2009, Congress passed the Credit Card Accountability, Responsibility and Disclosure Act. Now, your card issuer has to provide 45 days advance notice before it can increase your rate, fees or make any other significant change. Their notice provides you the option to cancel the card. You might also decide to keep it or to transfer the balance to balance transfer credit card.

But, wait. There’s more. One of the five most common situations for choosing balance transfer credit card might fit you.

  • You typically pay your balance in full, but currently cannot. The introductory period of the zero percent interest rate saves you being charged interest while you change your income.
  • You always carry a balance. Zero or low-interest lets you save money.
  • Or you need a rewards card that lets you earn cash back on new purchases. You could land a card that offers you the world.
  • You carry a balance on multiple credit cards and want to consolidate your debts. This is very common and works if you have a small amount you owe to credit cards.
  • You want to improve your credit score. You can improve your credit utilization ratio quickly by transferring the balance to a new card.

Balance Transfer Credit Cards for Those with Bad Credit

Here’s the truth. If you have a low credit score, let’s say of 580 or less, you probably won’t get a balance transfer credit card.

The exception is if you have defaulted on an existing credit card and that lender wants to bribe you into paying them. They will offer a temporary lower interest rate on a new credit card and transfer the balance onto it with a hefty fee. The card typically starts out with no available credit. You must make your payments on time and more than the minimum monthly payment to pay it off. The only way to ever access the full amount of available credit on these cards is to pay off the original debt.

You also may luck out and find a secured credit card that you can obtain with bad credit. Some lenders let you provide a security deposit of $200 to $300 in order to obtain twice that amount. You will still have a maximum credit limit and it will not exceed what your credit score’s maximum would signify it should.

If you file for bankruptcy, it will take seven years for it to fall off of your records. During that time, you will find it hard to get any credit card or loan at all. If you have a debt that you could not include in your bankruptcy and were hoping to get a balance transfer credit card to reduce it, this is unlikely.

Using Loanry to Find Balance Transfer Credit Cards

You could consult an online credit card comparison chart, but instead, why not obtain results tailored to your needs? Visit to fill out a short form that provides your name, location and last four digits of your Social Security Number. You’ll get back a list of potential lenders that suit your situation and credit score. You can save time and protect your credit score using this method. It does not create a hard hit to your credit report, so you are left to apply for your credit cards from the lenders that offer you the best chance at approval.

Final Thoughts

If you’ve considered refinancing your credit cards and loans using consolidation loans and it does not fit your situation, try balance transfer credit cards. You can find a credit card that lets you transfer the balance of one or more other cards and/or loans to a single, low-interest rate credit card. Some of these may have zero interest rates for a promotional period. Nab one if you can and if you genuinely need it. To keep your credit situation healthy, you should never simply take out a loan or credit card just because you can. Manage your credit wisely. This builds the best credit score.