The new year is almost here, and you know what that means, right?
It means “Auld Lang Syne,” giant glittering ball drops and midnight kisses. It means ridiculously named college football bowl games like the Famous Idaho Potato Bowl and the Marmot Boca Raton Bowl. It means countless lists of the year’s best movies, TV shows, books and — of course — cat videos.
It also means New Year’s resolutions. Millions of Americans swear up and down that this year, finally, absolutely, positively, without a doubt is the year they make that big change that will make their life better. They’ll lose weight. They’ll go back to school. They’ll call their mom more often. They’ll finally get out of debt.
That pledge to ditch debt is certainly one of the most common resolutions Americans make every year, and it is certainly one of the most challenging to accomplish. However, if you’re specifically targeting credit card debt, a balance transfer can and should be one of the tools in your arsenal.
Here’s why:
— Say you owe $5,000 on a card with a 19 percent APR, and pay $150 per month on that card.
— Then you transfer that entire balance to a card with a 0 percent APR on balance transfers for 12 months. It also has no annual fee, and a balance transfer fee of 3 percent of the transferred balance. And once the intro period ends, the card’s APR will be 19 percent.
— Under that scenario, you would take 39 months to pay the card off and you would save $1,278.84 in interest.
— If you could pay the entire balance off in that 12 month intro period — a tall order, admittedly — you’d save $2,014.50 in interest.
That’s an awful lot of money. If you can find a card with a longer 0 percent period (you can find them as long as 21 months) or without a balance transfer fee (not common, but not impossible to find), those savings can grow even larger.
Balance transfer cards aren’t without their flaws, though. Balance transfer fees can be expensive. The standard APR after your 0 percent introductory period can be high. You run the risk of missing out on the 0 percent offer if you wait too longer after you get the card to do the transfer. You can even have your introductory rate revoked prematurely if you’re 60 days or more late with a payment. However, if you know the rules and play by them, the cards can save you some real money.
With that in mind, here are a few balance transfer cards for you to consider.
Slate from Chase: This card comes with no interest on balance transfers or new purchases for 15 months — and there’s no transfer fee if you do it within 60 days of getting your card. (Balance transfer fees are typically about 3 percent of the balance transferred, which can add up to a lot of money, depending on the size of your balance.) There’s also no annual fee, and post-introductory APRs can be as low as 12.99 percent. It’s a great deal for those who transfer quickly and can pay the entire balance within 15 months.
Capital One QuicksilverOne Rewards: It has a shorter introductory period than the Slate card (just nine months), but there is no transfer fee at any time. (There is a $39 annual fee, however.) That means that there’s less pressure for you to act as soon as you get the card. You don’t want to dawdle, though, because the sooner you make the transfer, the more time you’ll have to take advantage of that 0 percent deal.
Citi Diamond Preferred: This card has the longest introductory period on the market — 21 months. However, it does come with a transfer fee of 3 percent or $5, whichever is greater. Still, if those extra interest-free months can help you fully knock out that debt, the card is certainly worth considering — especially since there is no annual fee and the post-introductory APR can be as low as 11.99 percent.
Discover it: The Discover it card doesn’t have the longest intro period (12 months), and it isn’t balance transfer-fee free (3 percent fee applies). However, when you factor in that there’s no annual fee and it has a post-introductory APR as low as 10.99 percent, it becomes clear this is a card worth considering — especially when you package it with Discover’s offer to double all the cash back you earn on the card for the first year.
None of these cards are perfect, and they all come with some rules and conditions that you need to be aware of. Even so, if you play by the rules, these cards can save you real money — and make this the year that you finally keep that darn New Year’s resolution.
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4 Balance Transfer Credit Cards to Consider for 2016 originally appeared on usnews.com
