When you’re carrying a lot of high-interest debt, it’s hard to imagine how another credit card can possibly help your situation. However, the right kind of credit card – a balance transfer card – may actually provide some relief.
But before you can realize the benefits of a balance transfer, you have to consider how much you might be paying in interest now.
Let’s say you’re carrying $5,000 in revolving credit card debt at an 18% APR. If you used the card enough to maintain that balance despite your monthly payments, you would pay a total of $900 in interest your first year. Ouch.
Even worse, let’s say you paid only $100 per month until the balance was gone. In that case, paying off your debt would take a cool 94 months – or almost eight years – and cost $4,311.18 in interest on top of your balance. That’s a lot.
5 Steps to Save Money with a Balance Transfer
- Figure out how much debt you owe
- Compare balance transfer offers to find the best deal
- Create a repayment plan that lets you pay down debt fast
- Pay as much as you can toward your balance during your card’s 0 percent APR introductory period
- Stay the course until you’re debt-free
A Balance Transfer in Action
With the prospect of paying that much interest looming, it’s no wonder so many people transfer credit card balances to find greener pastures. Using the scenario outlined above, someone could save hundreds or even thousands of dollars by transferring their balance to a balance transfer card like the Chase Slate® card.
With the Chase Slate® card, you get 15 months to pay off your balance without paying any interest. Furthermore, there are no balance transfer fees for the first 60 days of account opening (after that, 5% of the amount transferred with a minimum of $5), meaning that you can essentially transfer your balance and secure these savings for free.
- $0 Intro balance transfer fee for the first 60 days your account is open. After that, the fee for future transactions is 5% of the amount transferred with a minimum of $5.
- 0% Intro APR for 15 months on purchases and balance transfers. After that, 16.49% - 25.24% variable APR.
- See monthly updates to your FICO® Score and the reasons behind your score for free
- No Penalty APR – Paying late won't raise your interest rate (APR). All other account pricing and terms apply
- $0 Annual Fee
Note: You cannot take advantage of a Chase balance transfer offer unless you are transferring a balance from a card affiliated with a different bank.
Let’s say you transferred your $5,000 balance to your Chase Slate® card. Not only would you avoid paying a balance transfer fee, but you would also have 15 months to pay off your balance in its entirety without paying a cent for the privilege. If you could find a way to come up with $350 per month for those first 15 months, you could pay off your balance completely. And by doing so, you could save the entire $4,311.18 in interest you would have paid with your previous card.
It sounds complicated, but it really isn’t. Balance transfer cards help you save money by providing a temporary respite from the high interest rates traditional credit cards sometimes charge. And if you want to benefit, all you need to do is apply and take the steps to transfer your high-interest balances. That’s it.
Other Balance Transfer Offers to Consider
The Chase Slate® card is at the top of almost any list of best balance transfer cards because it doesn’t charge a fee for balance transfers during the first 60 days of account opening (5% with a minimum of $5, after). However, there are some other balance transfer offers to consider that do charge a balance transfer fee. It’s up to you to weigh the pros and cons and decide if it is worth it.
One card that comes with an excellent balance transfer offer is the Discover it® Cashback Match™. This card is a popular option because it comes with an introductory 0% APR period available on purchases and balance transfers – at 14 months (then ongoing 13.49% – 24.49% Variable APR). If you have a big balance to pay off, having that time to pay down your debt could truly benefit you.
Another perk – the Discover it® Cashback Match™ card offers a rewards program that makes it easy to earn 1% unlimited cash back automatically on all purchases and up to 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com, or wholesale clubs up to the quarterly maximum each time you activate. Here are some additional details:
Discover it® Cashback Match™
Highlights: Card Highlights Provided by Discover:
- Earn 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com, or wholesale clubs up to the quarterly maximum each time you activate.
- Earn unlimited 1% cash back on all other purchases – automatically.
- INTRO OFFER: Discover will match ALL the cash back earned at the end of your first year, automatically.
- Redeem cash back any amount, any time. Rewards never expire.
- Use your rewards at Amazon.com checkout.
- No annual fee.
A third option is the always popular Chase Freedom® card. Not only is this card considered one of the best no annual fee credit cards out there, it’s also touted for its excellent rewards program. Offering a sign-up bonus and a 0% introductory APR on purchases and balance transfers for 15 months doesn’t hurt either.
Here are some of the factors you should consider before signing up:
- Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening
- Earn 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate
- Enjoy new 5% categories each quarter
- Unlimited 1% cash back on all other purchases - it's automatic
- 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 16.49-25.24%. Balance transfer fee is 5% of the amount transferred, $5 minimum
- Cash Back rewards do not expire as long as your account is open and there is no minimum to redeem for cash back.
- Free credit score, updated weekly with Credit Journey℠
- No annual fee
Making a Balance Transfer Work for You
If you’re carrying high-interest debt and struggling to find a way out from under it, a balance transfer credit card might give you the breathing room you’re looking for. Just remember that most balance transfer cards charge a balance transfer fee equal to 3%-5% of your balance for the privilege. The only card currently waiving that fee for the first 60 days of account opening is the Chase Slate® card (after that, 5% of the amount transferred with a minimum of $5), so that might be the way to go if you’re adamant about avoiding fees.
Whatever option you choose, remember that this is your opportunity to pay down your debt once and for all. Don’t take the easy way out and continue making the lowest payments possible. Instead, figure out how many months you have that promotional 0% APR, and use that time to make headway against your debt without the burden of added interest.
A balance transfer can help you become debt-free once and for all, but only if you do your part.
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