http://www.nextadvisor.com/blog/2015/09/28/how-much-can-you-save-with-a-balance-transfer/

How Much Can You Save with a Balance Transfer?

by Jocelyn Baird September 28, 2015

Although it's ideal to pay off the balance on your credit card each month, sometimes emergencies or life itself gets in the way and you incur a balance you can't fully pay down. The interest on many credit cards can get as high as 25%, but the good news is, you have options. A balance transfer can be a good way to combine multiple credit card balances onto one card or move the complete balance from one to another and save money in the process. But how much can you save with a balance transfer?

What is a balance transfer?

Before we jump into the potential savings a balance transfer can get you, we wanted to make sure you understand what exactly it is. A balance transfer is really quite simple — it allows you to take the balance on your current credit card and transfer it to a new credit card. Why would you want to do that? Well, if you're carrying a balance on a credit card, chances are you're paying too much on interest. By transferring all or part of that balance to a new card with an extended 0% intro APR, you can save yourself money over the long term. Learn more about how they work by reading our balance transfer guide.

How much can you save with a balance transfer?

To illustrate how much you can save with a balance transfer, we determined the projected savings someone with a credit card balance of $1,000, $5,000 or $20,000 to transfer could expect. We compared the savings of transferring from a card with an APR of 20% to a card with a 15-month 0% intro APR and no balance transfer fee — similar to the terms Chase Slate offers.

If your current balance is $1,000, you can save $138 in interest over a 15-month period by transferring your balance to a card with a 0% intro APR and no balance transfer fee.

If your current balance is $5,000, your interest savings with a balance transfer (assuming there’s no balance transfer fee) will be about $693 over a period of 15 months.

If your current balance is $20,000 and you opt to complete a balance transfer to a card without a transfer fee, you will save a whopping $2,769 in interest over the course of 15 months.

These are just estimates, but they illustrate the potential savings at your fingertips if you switch to a balance transfer credit card with a great intro APR offer. Remember that the key is to do a balance transfer when it's going to save you money. While switching from a card with a 20% APR to one with a 15% APR won't save you a lot of money in the long run, especially if there's a fee to transfer the balance, opting for a card with a 0% intro APR for 15, 18 or 21 month will help you get ahead in payments. Also, it's important to keep in mind that while some cards like Chase Slate have an intro $0 balance transfer fee, most charge a 3% or 5% fee to complete each balance transfer. However, even with that fee, you can still save more over the long term since it’s likely that balance transfer fee is a lot lower than your current interest rate, so that shouldn't be a deterrent.

What are the top balance transfer cards?

Now that you know that you can save with a balance transfer, you might be wondering which cards are the best options to transfer your balance to. We rounded up the top-rated cards for balance transfers below.

Chase Slate is a superb choice for people who want to consolidate their high-interest credit cards onto a new card. Not only do cardholders get a 0% intro APR for the first 15 months, but Chase Slate also doesn't charge a balance transfer fee for the first 60 days (after which the fee is $5 or 3% of the total balance, whichever is greater). On top of that, you can also benefit from no penalty APR — meaning your APR won't increase if you are late on a payment — and free monthly Experian FICO scores to help you stay on top of your credit. Unlike most other balance transfer credit cards that require excellent credit, Chase Slate is available to those with good credit. This card is also embedded with chip technology, so you're all set for the switch-over this October.

If 15 months doesn't cut it for you, maybe the 21-month 0% intro APR offered by Citi Simplicity (a NextAdvisor advertiser) will. This card also doesn't charge late fees, annual fees or a penalty rate, making it a great choice for people who want to save money. It should be noted that Citi Simplicity has a balance transfer fee of $5 or 3% of the amount of the transfer, whichever is higher.

Not only does the Citi Diamond Preferred credit card (a NextAdvisor advertiser) also offer a 0% intro APR for 21 months, but it also has a reasonable post-intro APR variable rate as well. Perks are plentiful with this card, which include a personal concierge service, Citi Easy Deals points that you can redeem online for merchandise and gift cards and the ability to choose your own payment due date. The balance transfer fee for this card is the greater of $5 or 3% of the amount transferred.

Rounding out our list, the Discover it card provides a long 0% intro APR (18 months) with the opportunity to earn cash back with any purchase you make, meaning you can earn rewards while you save on interest with this card. You'll earn 5% cash back on purchases within select categories that rotate quarterly (up to $1,500) and 1% unlimited cash back on all other purchases, plus Discover will double your amount of cash back at the end of your first year. There is a balance transfer fee of 3% of each transfer, but you don't have to pay an annual fee with this card.

If you want to learn more about balance transfers and see how much you can save based on the amount you need to transfer and how much you plan to pay per month, head over to our balance transfer credit cards page and use our balance transfer calculator. This calculator can show you the best cards for your amount owed and credit rating, helping you save the maximum amount of money when you transfer.

Disclaimer: This content is not provided or commissioned by the credit card issuer. Opinions expressed here are author's alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. This content was accurate at the time of this post, but card terms and conditions may change at any time. This site may be compensated through the credit card issuer Affiliate Program.

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