What are the Best Balance Transfer Cards?

Reduce Credit Card Debt by Avoiding Interest Payments

Sep 4, 2009 Asa Ghaffar

Looking for a way to reduce credit card debt by borrowing money for free? Find out the best balance transfer cards to avoid paying interest.

Identifying the best balance transfer card is a great way to save money on revolving debt payments. Following an analysis of 41 cards in July 2008, a Consumer Action survey revealed that the median interest rate was 13.54%. Interest rates have increased since this survey due to rising default rates.

How a 0% Balance Transfer Offer Can Help

Avoiding further interest payments with a transfer helps to reduce credit card debt. This is because a higher percentage of each monthly payment goes towards clearing the outstanding balance. Interest avoidance is a practical way of reducing personal debt without substantially affecting a credit score.

Ineligibility for the Best Credit Card Balance Transfer Deals

Unless the applicant has a good credit history, few deals will currently be available. Given the current risk averse nature of lenders, it is unlikely that either a low interest or 0% balance transfer offer will be granted. An adverse credit history will show on credit reports for 6 years in the UK and up to 10 years in America.

Virgin MasterCard (UK Customers only)

This is arguably the best balance transfer card. The 0% rate lasts for 16 months, although there is a 2.98% handling fee. The absence of interest payments will save a customer who owes £10,000 of revolving debt between £1,500 to £2,000 over the lifetime of Virgin's offer.

The typical APR on new purchases is 16.6%, although there is a 50 day grace period where no interest payment will need to be made. This doesn't apply to a cash advance where the APR is 27.9%. There is also a 3% cash handling fee.

The credit limit awarded is based upon personal circumstances and will involve a full credit check. Those who have a good salary and a low income-to-debt ratio are more likely to be given a favourable limit than others.

It is important to note that any payments sent to reduce credit card debt will go towards clearing the lowest interest-bearing portion of the debt. The fact that this is a 0% balance transfer offer makes this fact particularly relevant as it is it is far more likely to apply.

Escape by Discover Card (U.S. Customers only)

With a 0% rate that lasts for a period of 6 months, this is amongst the best balance transfer cards for American customers. A 0% balance transfer offer involves a handling fee of 3%. If the transfer is requested after the application, the fee increases to 5%.

The typical APR is 11.99% to 18.99% for the first six months, but it reverts to variable rate thereafter. Cash advances attract an APR of 23.99% variable. There is an annual fee of $60. There is an alternative card from the same provider (the Discover More card) without an annual fee for those who aren't in need of airmiles.

Customers are able to earn airmiles as they spend; this is a particularly useful card for individuals who travel extensively. Two airmiles are earned for every $1 that is spent. Make sure that the balance transfer is applied for at the time of application and take a photo copy of the form as proof.

Signing-up to the best balance transfer card is a great way to reduce credit card debt. It is important to take advantage of 0% balance transfer offer whilst they are still available as they are becoming increasingly difficult to find, especially in America since the laws were tightened.

Source

creditcards.com

Disclaimer: This article in no way attempts to give legal or tax advice. One should consult a licensed attorney, tax advisor, or other qualified professional before proceeding.

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