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If you’re paying down the balance on a credit card over time, the interest costs can be astronomical! While it’s always best to pay your balance in full each month, at some point, you may end up in a situation where you need some extra time—especially after the holidays. The most common solution is to move your high-interest balance to a card with a 0% balance transfer offer.
In today’s post, we’re going to try to talk you out of that plan by sharing a strategy where you can get the same 0% intro APR rate, without the huge fees and other restrictions that come with balance transfers.
Why Balance Transfers Should Be Your Last Resort
The biggest problem with balance transfers is the huge upfront fee: most credit cards charge between 3-5% to transfer a balance. If you need to pay off a $5,000 balance over time, the initial fee will take $150-250 out of your pocket.
The second huge drawback is that balance transfers don’t earn any rewards points. If you transfer a significant balance, you’ll save on interest, but you’ll have zero rewards to show for it. You’ll also find that most cards with a balance transfer offer don’t have a signup bonus. As far as the bank is concerned, the 0% introductory APR is the new cardmember offer.
Lastly, you can’t transfer a balance between cards from the same issuer. In other words, if you’re carrying a balance on a Chase credit card, Chase balance transfer options are off the table.
It's worth noting that the The Amex EveryDay® Credit Card from American Express is currently offering an introductory APR rate of 0% on purchases for 15 months and 0% on balance transfers for 15 months (then a variable rate of 12.99% - 23.99%) and a $0 fee balance transfer offer.
If you do want to explore a traditional balance transfer, the Amex EveryDay is a great place to start. You can see our roundup of the top balance transfer offers here, but first, check out the strategy below to see if it could work for you.
Transfer Your Credit Card Balance Without Paying Fees
Fortunately, there is a great strategy that will solve all three of the problems above. You can get an extended 0% intro APR period, you’ll be eligible for a great signup bonus, and you can even open a new card issued by the same bank where you currently hold the high-interest balance.
The solution is to take advantage of a 0% introductory APR on purchases and use your normal monthly budget to pay off the high-interest balance. Here’s how it works:
- Rather than applying for a balance transfer card, apply for a card featuring a 0% intro APR offer on purchases
- Charge all your monthly expenses to the 0% intro APR card for the first 2-3 months, keeping in mind the minimum spend required to reach the signup bonus
- Use the money in your normal monthly budget to pay down the high-interest credit card debt while making minimum payments on the new card.
- Pay down the intro 0% APR card over the 12-15 month introductory period
For example, let’s say you had an unexpected expense come up and are carrying a $6,000 debt on a high-interest credit card. You’ve tossed around the idea of leveraging a 0% balance transfer card to clear the high-interest debt, but the potential $180-300 transfer fee is giving you second thoughts.
Instead, you can apply for a 0% intro APR card like the Chase Freedom Unlimited® or Ink Business Unlimited℠ Credit Card (if it is a business expense). Place all your monthly expenses on the card to get the signup bonus. And use the cash you would typically put aside for monthly expenses to pay down the $6,000 credit card debt.
Provided your monthly expenses are in the range of $2,000 to $2,500 per month, over the initial 2-3 months you’ve effectively transferred your $6,000 high-interest balance to a 0% intro APR offer without paying a balance transfer fee. Plus, you’ve earned a signup bonus and additional points in the process. Instead of the balance transfer costing you $180-300, you get the transfer free of charge, earn the signup bonus on a new card, and earn points or cashback on all the expenses you place on the 0% intro APR card.
Best 0% Intro APR Cards for Purchases
Below, you’ll find a few of our favorite personal and business cards featuring 0% intro APR periods on purchases. Each card listed offers a generous signup bonus (particularly the two Chase Ink Business cards) and provides a decent return on everyday spending, helping you to maximize this strategy.
If a longer intro APR period is a higher priority than earning rewards or a signup bonus, you can find some additional options with an intro period of up to 18 months in our post on the best current 0% purchase APR offers.
|CREDIT CARD||0% INTRO APR PERIOD||REG APR||WELCOME OFFER||ANNUAL FEE|
|Chase Freedom Unlimited®||15 months||14.99 - 23.74% - Variable||Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening.||$0|
|Blue Cash Everyday® Card from American Express||15 months||13.99% to 23.99 - Variable||Earn a Earn a $150 statement credit after you spend $1,000 in purchases on your new Card within the first 3 months.||$0|
|Capital One® VentureOne® Rewards Credit Card||12 months||14.49% - 24.49% - Variable||Earn 20,000 Miles once you spend $1,000 on purchases within 3 months from account opening||$0|
|Capital One® SavorOne® Cash Rewards Credit Card||15 months||15.49% - 25.49% - Variable||Earn $150 Cash Back after you spend $500 on purchases within 3 months from account opening||$0|
|Capital One® Quicksilver® Cash Rewards Credit Card||15 months||15.49% - 25.49% - (Variable)||Earn $150 Cash Back after you spend $500 on purchases within 3 months from account opening||$0|
|Wells Fargo Cash Wise Visa® card||15 months||13.99% - 25.99% - Variable||Earn a $150 cash rewards bonus after spending $500 in the first 3 months||$0|
|Ink Business Unlimited℠ Credit Card||12 months||14.74% - 20.74% - Variable||Earn $500 bonus cash back after you spend $3,000 on purchases in the first 3 months from account opening.||$0|
|Ink Business Cash℠ Credit Card||12 months||14.74% - 20.74% - Variable||Earn $500 bonus cash back after you spend $3,000 on purchases in the first 3 months from account opening.||$0|
|Capital One® Spark® Miles Select for Business||9 months||14.49% - 22.49% - Variable||Earn 20,000 Miles once you spend $3,000 on purchases within the first 3 months from account opening||$0|
The main challenge with this strategy is that it may take some time to fully transition your outstanding balance to the new card offering 0% APR on purchases. If your normal monthly budget is only $500, it probably doesn't make sense to slowly pay down a large balance in $500 increments—by the time you execute the process, you may be close to the end of your intro 0% purchase APR period.
It's also worth noting that you'll still be paying interest on the original credit card for the first few months. In most cases, you'll still come out far ahead, but you should run the math for your situation before you decide. Don't forget to consider the value of the points or cash earned from spending and the welcome offer before comparing with the balance transfer fee.
How to Evaluate Intro Purchase vs. Balance Transfer Costs
Here's some quick math for the example above with a $6,000 balance which you expect to pay down in $2,000 increments over three months:
If you assume a 20% annual interest rate on the high-balance card, you can approximate the monthly interest by dividing the rate by 12. In this case, we get 1.66% monthly.
- Month 1: You'll pay interest on $6,000 ~$100
- Month 2: You'll pay interest on $4,000 ~$67
- Month 3: You'll pay interest on $2,000 ~$33
Total interest costs here are ~$200
If you opt for a balance transfer offer with a 3% fee, you'd pay $180 to move your balance.
If you look at the Freedom Unlimited intro offer, you'll earn a $150 bonus after you spend $500 on purchases in your first 3 months from account opening. You'll also be earning 1.5X rewards as you accumulate $6,000 worth of purchases on the new account.
That means your total rewards, including the welcome offer, will be $240 ($150+$90). Remember, if you have one of the Chase cards that can transfer Ultimate Rewards to partners, you have 24,000 points, which could easily be worth $500 with the right redemption.
There is a widespread view that balance transfer cards are the most efficient method of paying down unwanted debt on a high-interest credit card. However, if you are comfortable putting in a little extra work, a 0% intro APR card can do the same job without the transfer fees, and you can earn a boatload of rewards in the process.
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