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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 common-sense 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 Aren't a Great Option
There are four key reasons why balance transfers aren't the best way to cut your interest expenses:
- The Balance Transfer Fee — Most credit cards charge between 3-5% to transfer a balance. If you need to pay off a $6,000 balance over time, the initial fee will take $180-300 out of your pocket.
- No Rewards Earned on the Transfer — Even if you transfer a balance to a rewards card that earns points or cashback on purchases, the amount transferred won't earn any rewards.
- No Signup Bonus — Most cards with balance transfer offers don't come with a signup bonus. As far as the bank is concerned, the 0% introductory APR is the new cardmember offer. Even if there is a welcome offer, it's usually not a good idea to make purchases with a card that has a transferred balance at an introductory APR.
- Transfers to the Same Bank Aren't Allowed — You can't transfer a balance between cards from the same issuer. If you're carrying a balance on a Chase credit card, Chase balance transfer options are off the table.
If you do want to explore a traditional balance transfer, the Citi® Double Cash Card 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.
Save on Interest, Earn Rewards, and Skip the Fees
Fortunately, there is a great strategy that will solve all four of the problems above. You can get an extended 0% intro APR period, earn rewards on each purchase, earn a 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 are carrying a $6,000 debt on a high-interest credit card. If you transfer that balance, a 3% to 5% fee would cost you $180-300.
Instead, you can apply for a card with a 0% intro APR on purchases—like the Chase Freedom Unlimited® or Blue Cash Everyday® Card from American Express (Rates & Fees). Place all of your monthly expenses on the new card to get the signup bonus. Then, use the cash you would typically put aside for monthly expenses to pay down the $6,000 credit card debt.
- Earn a $200 Bonus after you spend $500 on purchases in your first 3 months from account opening.
- Earn 5% cash back on grocery store purchases (not including Target® or Walmart® purchases) on up to $12,000 spent in the first year.
- Earn unlimited 1.5% cash back on all other purchases.
- Earn 5% on Chase travel purchased through Ultimate Rewards®, 3% on dining and drugstores, and 1.5% on all other purchases.
- No annual fee.
- 0% Intro APR for 15 months from account opening on purchases, then a variable APR of 14.99 - 23.74%.
- No minimum to redeem for cash back. Cash Back rewards do not expire as long as your account is open.
- Earn 5% on travel purchased through Chase
- Earn 3% on dining at restaurants
- Earn 3% on drugstore purchases
- Earn 1.5% on all purchases
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.
- Earn a $200 statement credit after you spend $2,000 in purchases on your new Card within the first 6 months.
- Buy Now, Pay Later: Enjoy $0 plan fees when you use Plan It® to split up large purchases into monthly installments. Pay $0 plan fees on plans created during the first 15 months after account opening. Plans created after that will have a plan fee up to 1.33% of each purchase amount moved into a plan based on the plan duration, the APR that would otherwise apply to the purchase, and other factors.
- Low intro APR: 0% for 15 months on purchases from the date of account opening, then a variable rate, 13.99% to 23.99%.
- 3% Cash Back at U.S. supermarkets (on up to $6,000 per year in purchases, then 1%).
- 2% Cash Back at U.S. gas stations and at select U.S. department stores.
- 1% Cash Back on other purchases.
- Cash back is received in the form of Reward Dollars that can be easily redeemed for statement credits.
- No annual fee.
- Terms Apply.
- Rates & Fees
- 3% Cash Back at U.S. supermarkets (on up to $6,000 per year in purchases, then 1%)
- 2% Cash Back at U.S. gas stations and at select U.S. department stores
- 1% back on other purchases
- Cash back is issued as a statement credit.
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 $200 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% - 23.99% - Variable (Rates & Fees)||Earn a $200 statement credit after you spend $2,000 in purchases on your new Card within the first 6 months.||$0 (Rates & Fees)|
|Blue Cash Preferred® Card from American Express||12 months||13.99% - 23.99% - Variable (Rates & Fees)||Earn a $300 statement credit after you spend $3,000 in purchases on your new Card within the first 6 months.||$0 introductory annual fee for the first year, then $95. (Rates & Fees)|
|Capital One VentureOne Rewards Credit Card||12 months||14.99% - 24.99% - Variable||20,000 Miles once you spend $500 on purchases within 3 months from account opening||$0|
|Capital One SavorOne Cash Rewards Credit Card||15 months||14.99% - 24.99% - Variable||Earn $200 Cash Back after you spend $500 on purchases within 3 months from account opening||$0|
|Capital One Quicksilver Cash Rewards Credit Card||15 months||14.99% - 24.99% - (Variable)||Earn $200 Cash Back after you spend $500 on purchases within 3 months from account opening||$0|
|Wells Fargo Cash Wise Visa® card||15 months||14.49%-24.99% - Variable||Earn a $150 cash rewards bonus after spending $500 in the first 3 months||$0|
|Ink Business Unlimited® Credit Card||12 months||13.24% - 19.24% - Variable||Earn $750 bonus cash back after you spend $7,500 on purchases in the first 3 months from account opening.||$0|
|Ink Business Cash® Credit Card||12 months||13.24% - 19.24% - Variable||Earn $750 bonus cash back after you spend $7,500 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 it 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 $200 bonus after you spend $500 on purchases in your first 3 months from account opening. You'll also be earning a minimum 1.5X rewards as you accumulate $6,000 worth of purchases on the new account.
That means the minimum rewards you'll earn, without factoring in points earned via bonus categories, will be $290 ($200+$90). Remember, if you have one of the Chase cards that can transfer Ultimate Rewards to partners, you have 29,000 points, which could easily be worth $500-600 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 card with a 0% intro APR on purchases can do the same job without the transfer fees—and you can earn a boatload of rewards in the process.
For rates and fees of the cards mentioned in this post, please visit the following links: Blue Cash Everyday® Card from American Express (Rates & Fees), and Blue Cash Preferred® Card from American Express (Rates & Fees)
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