Clear your existing credit card debt without paying interest or an annual fee.
If you’re carrying debt on an existing credit card, chances are you’re also getting bled dry by the compounding interest fees on your account. A high interest rate can have you trapped in debt for far longer than desirable, and if repaid over an extended period, you could even end up paying more money in interest fees than your initial loan principal.
This is where a balance transfer credit card can really come in handy: By creating the breathing space you need to pay down your debt without the interest penalties. An annual fee waiver only sweetens the deal and maximizes your savings. All this money saved, if put toward repaying the debt, will also mean you can achieve debt freedom sooner.
$0 annual fee and 0% intro balance transfer with the Blue Cash Everyday® Card from American Express
Read moreCompare balance transfer credit cards with no annual fee
What is a credit card with a $0 annual fee and 0% intro APR on balance transfers?
This type of credit card is designed to let you pay down your credit card balance without the extra costs of interest or an annual fee. It essentially lets you transfer an existing credit card debt from one or more cards onto your new card, where you can enjoy 0% interest on the loan for a specified promotional period, usually between 6 and 21 months.
Some cards offer $0 annual fees for life, while others waive it for a promotional period. A balance transfer fee — typically between 1% and 3% of your transferred debt amount — may also apply, but this can be offset by your interest and annual fee savings.
Case study: Is the annual fee the right focus?
While it’s nice to find a balance transfer credit card that offers both a $0 annual fee and 0% intro APR on balance transfers, the annual fee might not be as big of a deal as you think.
Let’s say you have $10,000 of debt on a credit card with a variable APR of 18% and no annual fee, and you can only afford to make monthly payments of $500. At this rate, it will take you 24 months to pay off your debt, and you’ll pay $1,996 in interest.
You’re considering transferring the debt to one of these balance transfer credit cards to take advantage of its 0% intro APR on balance transfers. One comes with an annual fee of $49, while the other has no annual fee:
- Balance transfer credit card 1:
$0 annual fee; 0% intro APR on balance transfers for 12 months, then 15% variable APR; 3% balance transfer fee - Balance transfer credit card 2:
$49 annual fee; 0% intro APR on balance transfers for 18 months, then 15% variable APR; 3% balance transfer fee
If you were to go with balance transfer credit card 1 that offers no annual fee and continued making monthly payments of $500, it’d take you 22 months to pay off your balance with $580 in interest and balance transfer fees. You’ll pay off your debt two months faster and save $1,416 in interest.
However, let’s look at what would happen if you were to go with balance transfer credit card 2 that has a $49 annual fee. By making monthly payments of $500, you could pay off your debt in 21 months and pay $429 in interest, annual fees and balance transfer fees. Even with those two years of annual fees, you’re still saving money on interest compared to both other credit cards and also paying off your debt faster.
In this case, having to pay an annual fee was offset by the longer 0% intro APR on balance transfers. Keep this in mind before placing too much emphasis on whether a balance transfer credit card has an annual fee or not.
How to compare balance transfer credit cards
You should always research the various offers available before deciding on a card. When it comes to comparing cards, these are the major factors to consider:
- Annual fee waiver.
Some cards offer no annual fee for the entire life of the card, while others only waive it as a promotional offer. In the latter case, you should know when the annual fee will kick in, like in the second or third year, and how much it will cost from then on.
- Balance transfer period.
Consider the length of the promotional offer, such as 0% interest for 6 months vs. 0% interest for 18 months. The interest fees saved over a longer period can be substantial. Make sure that you can repay your entire balance before the promotional period ends, otherwise your remaining balance will collect the revert interest rate.
- Revert rate.
The revert rate is typically the high-interest purchase or cash advance rate that kicks in once the promotional period ends. This is particularly important if you’re uncertain of being able to pay off all of your debt within the promotional period.
- Balance transfer fee.
This is a one-time fee that you may have to pay to move your balance over to the new card. There are credit cards that omit this fee, but some cards charge up to 3% on your balance transfer amount, which could mean a fee of $300 on your $10,000 debt. This is usually a small amount compared to the interest fees you will save, but should be factored in nonetheless. - Balance transfer amount.
Some credit cards will allow balance transfers up to 100% of your new credit card limit, while some may impose a balance transfer limit. Some cards, for example, only let you transfer a balance up to 90% of your card limit on the new credit card. This can be an important consideration if your existing debt is a large amount and you’re not sure what your new approved credit limit will be.
- Purchase rate.
This is the interest rate for new purchases made on the card. Be careful about making new purchases on your balance transfer credit card because you will not be eligible for interest-free days when carrying an outstanding balance and all repayments will go directly to your purchases if it’s collecting the higher interest rate.
- Cash advance rate.
Cash advances, such as ATM withdrawals, usually carry a higher interest rate of around 20% to 22%. Cash advances collect interest immediately and often incur a cash advance fee too, so you might want to avoid them if you’re trying to save on interest and consolidate your debt. - Other features.
Consider other card features like the complimentary extras that may be offered, as well as the ability to earn rewards on the card. Complimentary extras often include travel insurance coverage and purchase protection policies. While you shouldn’t be using the card to make purchases or earn reward points while paying down a balance transfer, these features could be of interest if you plan to continue using the card after your debt has been repaid.
What are the benefits of a no annual fee 0% balance transfer card?
The benefits of a no annual fee 0% balance transfer card are:
- Consolidation of debt at 0% interest. Customers can take control of their debt by transferring it to a card with a lower balance transfer rate to repay their debt without the burden of interest. Not only will this allow you to repay your debt fast, but it can also lead to dramatic savings.
- Competitive pricing. Competitive rates and interests can allow you to manage your finances with greater ease during the balance transfer period.
- Credit improvement. If you have multiple debts across a number cards, this can reduce your credit score. If you transfer the debt to a single card and reduce the overall amount, this could help repair your credit history.
What are the features of a no annual fee 0% balance transfer card?
The main features of a no annual fee 0% balance transfer card are:
- Reward programs. While consolidating your debt is a big enough incentive for most customers, an added advantage of rewards program can make the card a must have. These reward points can be earned on any eligible purchase.
- Complimentary travel insurance. Some cards offer complimentary travel insurance which can be useful for customers who are planning for any overseas trip in the near future.
- Interest-free days. Most of the cards provide interest-free periods on purchases. This effectively means that the next expense of owning the card can be absolute zero if it is used judiciously.
- Low or zero transaction fees. These cards also provide very low or zero transaction fees on foreign transactions. This should be useful for customers dealing in the foreign currency on a regular basis.
Credit cards that allow personal loan balance transfers
How to apply for a balance transfer credit card
Once you’ve compared your options and decided which card you want, you can apply online. This can take mere minutes if you have all the necessary information and documents ready, but more importantly, you must meet the card’s eligibility criteria to successfully apply.
Eligibility requirements
- Age.
You must be at least 18 years old to apply.
- Residential status.
You must be a US citizen or permanent resident, although some credit cards allow certain visa holders to apply.
- Annual income.
Each credit card has its own stipulated annual income requirement, generally starting from $15,000 upward. Ensure that you satisfy this requirement before applying.
- Credit history.
You must typically have a clean credit history and a good or very good credit score to be successful in your application.
Necessary information and documents
- Proof of identification.
You will need to provide a copy of your driver’s license or passport.
- Financial information.
The application form will ask for financial details and you may also be asked for bank statements or other financial documents.
- Employment details.
You’ll be asked to provide details of your current and previous employment, as well as your employer contact details. You may also need to provide recent pay stubs or even your employment contract. If self-employed, you will generally be asked for your most recent tax return and other proof of income.
- Assets, liabilities and expenses.
The application may ask for details of your assets, liabilities and expenses, and you may need to furnish proof of listed assets and liabilities. - Credit limit and balance transfer.
The application will also ask for your desired credit limit and the requested amount of your balance transfer. You will need to provide the account details of your current credit cards from which you wish to transfer your balances.
When choosing your new card, it is advisable to forecast a strict repayment schedule to ensure that you can successfully pay off your full debt within the promotional period offered by the card. Make sure your savings on the new card also outweigh all possible future fees, so that the balance transfer ultimately proves worthwhile for you. Once your new card is approved, start chipping away at that old debt without having to worry about interest or annual fees.
Bottom line
Finding a credit card that offers both a $0 annual fee and 0% intro APR on balance transfers can help you pay off your debt faster while avoiding interest and fees. Still, you may not want to place too much emphasis on whether a balance transfer credit card comes with an annual fee, as the savings in interest with a longer 0% intro APR offer can outweigh the costs of annual fees in many cases. You may want to use our balance transfer calculator to help you decide which balance transfer credit card makes the most sense for your financial situation.
