Deciding to apply and get a 0 balance transfer credit card should be a strategic personal finance decision. The best 0 balance transfer credit card for you is one that meets your strategic personal finance goal the most.
Which 0 balance transfer credit card for you depends on your objective. Once you know your objective, then you can choose and apply for the best card for you.
Considerations when looking for a 0 balance transfer credit card
1. Interest free duration
Determine how long you’d like to have an interest free period. The range among these types of credit cards varies widely, from 3 months to up to 15 months. If you wish to delay interest accrual for as long as possible, then apply for then the best 0 balance transfer credit card for you is one that delays interest accrual on transferred balances for 15 months.
2. Transfer fees
The downside to these types of credit cards is that you pay an up front transfer fee, often 3% on the balance you transfer. This amount can add up. For example, if you transfer $5,000, your transfer fee at 3% will be $150. Therefore, you need to calculate whether not having to pay interest on your balance for the interest free period will save you more money than the transfer fee.
Using the $5,000 balance transfer example, if you cannot pay down that balance and interest continues to accrue at 10% per month (a low interest rate) for 12 months, the interest you would pay would be approximately $500. Therefore, clearly in this example, the transfer fee is well worth getting a 0 balance transfer credit card.
3. Annual fees
Fortunately, most balance transfer credit cards do not have an annual fee. Therefore, unless the perks of a card with an annual fee are fantastic, the best 0 balance transfer credit card doesn’t have an annual fee.
4. Interest rate (APR) after 0 interest period
Don’t ignore the stated interest rate (APR) when choosing the best 0 balance transfer credit card. The range in interest rates is huge. Yes, I know you don’t pay interest for a stated duration; however, at the end of the interest free period, any outstanding balance will accrue interest at the stated APR. Often 0 balance transfer credit cards have a higher APR than other credit cards (there’s always a catch).
Moreover, if you make purchases with your new 0 balance transfer credit card, you’ll start accruing interest on those purchases immediately.
Important: be sure to check the APR for cash advances. Cash advances often have a higher APR attached.
If a low APR is most important to you, then consider getting a low interest rate credit card.
5. Late payment charges
It’s important that you’re always aware of the late payment charges for any credit card you get. The same applies to 0 balance transfer credit cards. Late payment charges can be hefty.
6. Assess your ability to pay off the balance during the 0 interest free period
The best way to use a 0 balance transfer credit card is to pay off the transferred balance during the interest free period. Before applying for this type of credit card, assess carefully your ability to pay off the balance during the interest free period.
I’ve used 0 balance transfer credit cards in the past with great success and saved a great deal of money doing so. However, it’s easy for the strategy to go awry. The best 0 balance transfer credit card is a personal finance tool that can help you improve your financial situation … when used right and when you get the right 0 balance transfer credit card for you and your situation.