It is also one of the most difficult credit card questions to answer.
The simplest answer is "it depends.
"If only it were that simple.
Finding the best balance transfer depends on a number of factors.
Here, we will examine a few common situations where there is definitely a best balance transfer option.
Situation I:You want to lower your current interest rate and will make new purchases.
In this situation, a credit card that offers a 0% interest rate on purchases and balance transfers is clearly the best option.
Offers for these credit cards are quite common and most provide a 0% interest rate for 1 year.
This balance transfer approach cuts down your current interest expenses while keeping down interest costs on new purchases.
A downside to many of these credit cards is that most will impose a 3% balance transfer fee of up to $75.
However, even with the balance transfer fee, transferring a $3500 balance from a card with a 14% interest rate will still save you over $400 on interest, not including the money you save on new purchases.
For most, this is the best balance transfer credit card.
Situation 2:You want to transfer a high rate balance and will not make new purchases.
Here, a no fee credit card is the best balance transfer option.
Finding a no fee balance transfer credit card is a difficult task these days, as most companies no longer offer them.
However, with this type of card, transferring a $3500 balance from a credit card that charges 14% interest will save you over $500.
A major downside to no fee balance transfer offers is that most will not offer a 0% rate on purchases.
Thus, if you add $2,000 in purchases, you may end up wasting the money you saved on the balance transfer by racking up another $300 in interest charges.
Fortunately, there is a good way around this option.
Simply get a credit card that offers 0%, no fee balance transfers and another that offers 0% on purchases.
For most, this can be the best overall balance transfer option.
Situation 3:You intend to pay your balance off over a long period of time.
If you plan to pay your credit card balances down over a longer period of time, a Fixed APR credit card is probably the best balance transfer option.
Fixed APR balance transfers typically offer a balance transfer rate of 4.
99% to 5.
99% until the balance is repaid.
Many Fixed APR cards charge balance transfer fees, effectively raising your interest rate during the first year.
However, if you intend to pay your balance over a period of five years, a fixed APR balance transfer will offer solid savings in the long run.
Final Thoughts An analysis of your current situation can go a long way in finding the best way to save with a balance transfer.
For many, a no fee balance transfer, combined with a 0% credit card, will provide the most savings.
But as you can see, when it comes to selecting the best balance transfer, it really does depend.