If you’re carrying a balance on a credit card, there’s a good chance you’re paying north of 20% APR on it. If so, you should have just one priority: Stop the bleeding.
A top balance transfer card can help you do just that. Cards that earn rewards are nice — but if you’re in debt, a balance transfer will probably save you much more.
My team at Motley Fool Money reviewed more than 100 credit cards to find the best balance transfer cards available this month. Here’s our top pick — plus an alternative that’s worth a look.
What is a balance transfer — and why would you do one?
A balance transfer is pretty much what it sounds like: you “transfer” your existing credit card balance from one card (or multiple cards) to a new one — a balance transfer card. Then, you can pay it off at 0% APR for a set period — often 12 to 21 months — so that every dollar of your monthly payment is going towards the principal balance.
The catch is the balance transfer fee — usually 3%-5% of the amount you move over. But if you’re currently paying 22% APR on a $7,000 balance, even a 5% fee is likely cheaper than a few months of interest at your current rate. And over a 21-month payoff period, you’re coming out way ahead.
One thing to know going in: You’ll need good to excellent credit to qualify for the best offers. Also, you typically have a limited window — often the first few months — to complete your transfer and lock in the intro rate.
Citi® Diamond Preferred® Card: The longest runway at the lowest entry cost
The Citi® Diamond Preferred® Card, from our partner, is our top pick for balance transfers this month, and it’s easy to see why.
It offers 0% intro APR for 21 months on Balance Transfers — one of the longest windows available right now — and 12 months on Purchases. A 16.49% – 27.24% (Variable) APR applies at the end of the intro periods.
There is an intro balance transfer fee of 3% of each transfer (minimum $5) completed within the first 4 months of account opening. After that, your fee will be 5% of each transfer (minimum $5).
That’s a killer combination of intro period and transfer fee. A longer intro window means you can make lower monthly payments, and still pay off your balance while avoiding interest. And the low intro balance transfer fee — 3%, vs. the 5% you’ll see on most competing cards — means you’re saving up front, too. On a $10,000 transfer, that’s the difference between paying $300 and paying $500.
This card doesn’t earn rewards, so it doesn’t offer much value past the intro period. It’s built to do one thing well: Give people with high-interest debt a long and inexpensive window to pay it off. For that job, it’s our favorite card in the 0% intro APR cards category right now.
Wells Fargo Reflect® Card: Another great option
The Citi® Diamond Preferred® Card is perfect for saving on balance transfers. But if you’re also planning to make new purchases on your card, the Wells Fargo Reflect® Card (rates and fees) is worth a look.
It offers the same length interest-free window as the Citi® Diamond Preferred® Card, but it offers 0% intro APR for 21 months from account opening on purchases and qualifying balance transfers. After the intro period, a 17.49%, 23.99%, or 28.24% Variable APR will apply.
Most balance transfer cards give a shorter window on new purchases, but not the Wells Fargo Reflect® Card. That makes it a good bit more flexible if you need to save on upcoming spending.
The tradeoff is in the balance transfer fee. The Wells Fargo Reflect® Card charges a fee of 5%, min: $5, compared to the Citi® Diamond Preferred® Card’s 3% intro offer. On a smaller balance, that gap is manageable. On a larger one, it adds up
The Wells Fargo Reflect® Card also comes with $600 in cellphone protection — a perk you don’t get with the Citi® Diamond Preferred® Card.
If your only goal is eliminating existing debt as cheaply as possible, I’d still go with the Citi® Diamond Preferred® Card for that lower intro fee. But if you want the same long runway on both sides of the ledger, the Wells Fargo Reflect® Card is worth considering.