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Debt Consolidation vs. Bankruptcy – Which Option is Better?

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

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If you feel as if you are drowning in your debts, you may already be considering options for assistance, like one of several debt consolidation methods or filing for bankruptcy. The assistance you ultimately turn to will heavily depend on the severity of your financial situation. If you’re choosing between debt consolidation and bankruptcy, you are comparing options that vary greatly in cost, complexity and risk.

“Every possible option should be thoroughly researched, and no quick decisions should be made,” said Martin Lynch, director of education at Cambridge Credit Counseling in Agawam, Mass. “It usually takes a long time to get into debt trouble, and the process to unwind those debts should also involve patience and consideration before you commit to any option.”

What is debt consolidation and how does it work?

  • Personal loans
  • Balance transfer credit cards
  • Home equity loans
  • Home equity lines of credit

When you consolidate debts, you essentially roll multiple debts into one. A new loan or line of credit is used to pay off previous debts, leaving you to manage one monthly payment. Popular debt consolidation products include personal loans, balance transfer credit cards, home equity loans and home equity lines of credit.

Ideally, the consolidation loan will have more favorable terms than existing debts, like a lower interest rate or monthly payment. In addition, consolidating debts could help reduce the number of bills a borrower is responsible for keeping up with.

What is bankruptcy and how does it work?

  • Chapter 7
  • Chapter 13

Bankruptcy is a federal protection that helps individuals and businesses who cannot afford to repay their debts. Bankruptcy can eliminate consumer debts and may help debtors repay what they can through court-approved debt repayment plans. The law allows individuals to file for either Chapter 7 (liquidation) or Chapter 13 (repayment) bankruptcy.

Chapter 7 bankruptcy is referred to as liquidation bankruptcy because a borrower may have to sell some of their assets to pay off their debts. In Chapter 7, any of the borrower’s assets that are not exempt from sale under law may be sold by a court-appointed trustee or turned over to creditors to settle debts. Most other debts are discharged, with some exceptions (more on that in a minute).

In a Chapter 13 filing, a court approves a repayment plan that lets the borrower repay their creditors over three to five years. Any remaining amount owed on the debts will be discharged after all payments are made under the repayment plan.

Some debts, like most student loans, most tax obligations, child support, alimony and court and criminal fines are not eligible for discharge in bankruptcy.

Comparing debt consolidation and bankruptcy

Here’s a comparison of debt consolidation and bankruptcy.

Qualifications

Debt consolidation

  • A FICO credit score of at least 600
  • A low debt to income ratio below 40%
  • No recent bankruptcies

Bankruptcy

Chapter 7
You must complete credit counseling within the six months prior to filing for bankruptcy, as well as a post-bankruptcy debtor education course for debts to be discharged.

You must also pass a “means test” for eligibility:

  • Your monthly income must be below the median state income, based on family size.
  • Your disposable income isn’t enough to satisfy your debt obligations.

Chapter 13
You must complete credit counseling within the six months prior to filing for bankruptcy, as well as a post-bankruptcy debtor education course for debts to be discharged.

  • Secured debt (e.g. mortgages and auto loans) must not be worth more than $1,184,200 total
  • Unsecured debt (e.g. credit cards and medical bills) must not exceed $394,725

What debts qualify?

Debt consolidation

Existing debts such as:

  • Credit cards
  • Medical bills
  • Utility bills
  • Payday loans
  • Student loans
  • Taxes
  • Bills in collection

Bankruptcy

Chapter 7
A bankruptcy trustee or bankruptcy court liquidates nonexempt assets sufficient to repay creditors.

Chapter 7 bankruptcy may result in discharge of the following existing debt:

  • Credit cards
  • Personal loans
  • Medical bills
  • Utility bills
  • Payday loans
  • Bills in collection
  • Obligations under leases and contracts
  • Promissory notes

Certain items do not count toward your assets, including:

  • household goods
  • wedding rings
  • money in retirement accounts
  • medical supplies

Some assets are exempt under federal and state law, and exemptions vary by state. Federal bankruptcy law allows you to keep up to $15,000 of home equity and $2,400 of vehicle equity, so your home, vehicle and other assets could be protected under state or federal exemptions. But exemptions aren’t automatic — talk to a bankruptcy attorney in your area to understand what you’re at risk of losing.

Chapter 13
You can file for Chapter 13 if you have less than $394,725 in unsecured debts like credit cards and personal loans and less than $1,184,200 in secured debts like a mortgage or auto loan. Filing Chapter 13 may stop home foreclosures, though you must make timely mortgage payments during the Chapter 13 plan. You can also prevent repossession of some assets by restructuring secured-debt payments within the Chapter 13 repayment plan.

Chapter 13 bankruptcy may result in discharge of the following existing debt:

  • Credit cards
  • Medical bills
  • Utility bills
  • Payday loans
  • Student loans
  • Taxes
  • Bills in collection

A Chapter 13 bankruptcy discharge does not eliminate long-term obligations like a home mortgage. You will continue to pay the remainder of the obligation after the repayment plan ends.

Effect on credit score

Debt consolidation

You may see your credit score drop slightly, because applying for new credit generates a hard inquiry on your credit report and can shave a few points off your score.

However, you can expect your credit score to improve as you make on-time payments on your new loan.

Your credit score might actually improve in the short term if you pay off revolving debts (like credit cards) but keep the accounts open. Closing accounts lowers your credit limit, raising your credit utilization ratio — a major factor in credit scores — and in turn lowering your credit score. Not paying off debt or adding additional debt can also impact you negatively.

Bankruptcy

A study by LendingTree, the parent company of MagnifyMoney, found 43% of people with a bankruptcy on their credit file have a credit score of 640 or higher within a year of the bankruptcy, and that figure goes up to 65% two years post-filing — but you should expect your credit score to drop after filing for bankruptcy.

Bankruptcy is considered a very negative event and will cause serious damage to a filer’s credit score for as long as it remains on the credit report.

A Chapter 7 filing stays on your credit report for 10 years, while a Chapter 13 filing should fall off your report after 7 years.

The older negative information is, the less impact it will have on your credit score.

You may see accounts included in the bankruptcy filing removed from the report before the bankruptcy is removed. Any individual account that was included in the bankruptcy will be removed 7 years from its delinquency date.

The amount your score falls will vary depending on how many accounts are part of the bankruptcy and whether they were delinquent or charged off. Your credit score prior to bankruptcy also plays a factor in this — borrowers with higher credit scores prior to filing for bankruptcy can expect to see larger drops in credit score.

How it appears on your credit report

Debt consolidation

Balances on consolidated debts will decrease or be marked as paid off, and a new loan will be added to your credit report.

Bankruptcy

Chapter 7
Bankruptcy will drop off your credit report 10 years from the filing date. Accounts included in the bankruptcy will be removed 7 years from their delinquency dates.

Chapter 13
Bankruptcy will drop off your credit report after 7 years from the filing date. Accounts included in the bankruptcy will be removed 7 years from their delinquency dates.

Length of process

Debt consolidation

The time frame varies from several months to several years, based on the term of the debt consolidation loan.

Bankruptcy

Chapter 7
The entire process may take up to six months to complete.

Chapter 13
The legal process may take several months; the repayment period will last three to five years.

Cost

Debt consolidation

You will have to pay interest on your new loan, and rates vary widely by loan type.

Some personal loans may charge fees such as:

  • Loan origination fee
  • Prepayment fee
  • Loan credit insurance

Credit card companies may charge a fee to make a balance transfer between credit cards. A 3% balance transfer fee is common. With a balance transfer credit card, you may be able to transfer credit card debt to a card with a 0% APR on balance transfers for a limited time, but if you don’t pay off the balance during the 0% APR intro period, your debt may begin to accrue interest.

There may be fees associated with a HELOC or home equity loan such as:

  • An appraisal fee, to gauge the current value of the property
  • Application costs
  • Processing fees
  • Miscellaneous lender fees
  • Cancellation fee
  • Inactivity fee

Bankruptcy

Chapter 7

  • Filing fee: $245
  • Administrative fee: $75
  • Trustee fee: $15
  • Attorney: varies
  • Pre- and post-bankruptcy credit counseling/debtor education courses: about $50-$100 each

Chapter 13

  • Filing fee: $235
  • Administrative fee: $75
  • Convert Chapter 13 to Chapter 7: $25
  • Attorney: varies
  • Pre- and post-bankruptcy credit counseling/debtor education courses: about $50-$100 each

Generally, interest is not paid on unsecured debts. Interest on secured debts are paid through the Chapter 13 plan. How bankruptcy courts determine that rate varies by state, but the Supreme Court case Till v. SCS Credit Corp. provided guidance that the rate can be calculated as the prime rate plus 1.5%.

Tax consequences

Debt consolidation

None.

Bankruptcy

If you are owed a tax refund, the money may be delayed or the funds may be turned over to trustee.

Discharged debt is taxable as income, so if you have debts discharged you may need to set aside funds to pay the tax when the time comes.

Benefits

Debt consolidation

  • Avoid severe credit damage.
  • Improve your credit score over time.
  • There’s no risk of losing personal property with a personal loan or balance transfer credit card.
  • It may be easier to qualify for than bankruptcy.

Bankruptcy

Chapter 7

  • You can have most unsecured and secured debts discharged quickly, within 4 to 6 months.
  • You may not have to pay back the entire amount of what you owe.
  • By law, collections efforts have to stop.
  • Under state and federal law, you may be allowed to keep certain exempt property.

Chapter 13

  • You can pay back some of what you owe to creditors over 3 to 5 years.
  • Your remaining debts are discharged after completing the 3- to 5-year repayment plan.
  • You may not have to pay back the entire amount of what you owe.
  • Make one installment payment to a trustee, instead of managing multiple debts.
  • Save property like a house headed to foreclosure or vehicle about to be repossessed.
  • Save assets that would otherwise be sold in a Chapter 7 filing.
  • It may allow you to catch up on delinquent mortgage payments over time.
  • By law, collections efforts have to stop.
  • It protects cosigners from liability on consumer debts.
  • It may lower the monthly payment on secured debts.

Risks

Debt consolidation

Bankruptcy

Chapter 7

  • Because of the credit score damage caused by bankruptcy, you risk not being able to qualify for credit when you need it, particularly in the first few years after declaring bankruptcy.
  • You risk losing assets not protected by exemption (consult with an expert about what’s applicable for exemption in your state).
  • You must wait 2 years to take out an FHA mortgage and 4 years for a conventional mortgage.
  • You may face issues renewing professional licensing.
  • Cosigners are not protected in a Chapter 7 filing, so creditors can still go after them and can sue for payment.

Chapter 13

  • Because of the credit score damage caused by bankruptcy, you risk not being able to qualify for credit when you need it, particularly in the first few years after declaring bankruptcy.
  • You must wait 2 years to take out an FHA mortgage and 4 years for a conventional mortgage.
  • You may face issues renewing professional licensing.

Life after debt consolidation or bankruptcy

Be prepared to make some life changes after consolidating your debts or declaring bankruptcy.

Debt consolidation

After you’ve consolidated your debt, your focus should be on paying it off. If you’ve consolidated credit card debts, try to not rack up debt again on the credit cards.

You can build your credit score by adding positive information to your credit report. Paying your bills in full and on time can help both keep your credit utilization low and establish a record of on-time payment history. Together, those factors comprise 65% of your FICO score. Your utilization is the overall percentage you use of your available revolving credit, and experts recommend keeping that figure below 30%. Your on-time payment history makes up 35% of your credit report and demonstrates you can manage your debt payments.

Making and following a budget can help prevent you from piling up more debt. It would be wise to start saving some amount of money in an emergency fund, as it may keep you from turning to high-cost debt when you encounter unexpected costs. Experts recommend you save enough to cover three to six months’ worth of fixed expenses.

Bankruptcy

Having the bankruptcy on your credit report will weigh down your credit score for a while, but the process also gives you a fresh start.

“Filing for bankruptcy can devastate a score, but that’s not the focus of the consumer’s decision at that point — discharging debt is,” said Lynch. He adds most filers have at least some credit offers soon after filing, although they may not receive the best rates.

You can rebuild your score over time by adding positive information to your credit history, like on-time payments, and using very little of your available credit. If you need an idea of where and how to start rebuilding, LendingTree has tips on rebuilding your credit after filing bankruptcy, here.

The same advice as debt consolidation stands as far as managing your cash: You should create and follow a budget, as well as establish an emergency fund so that you don’t find yourself in a similar situation a few years down the road.

How to decide which option is better

When debt consolidation makes sense over bankruptcy

Debt consolidation may be a more attractive option compared to bankruptcy if you have a reasonably good credit score and can pinpoint the root of why you got into debt in the first place. If it was a one-off incident like a job loss or medical issue that forced you to rack up debt, or you’ve recently kicked poor spending habits that got you into debt, you may be able to use a debt consolidation loan to finally get back on track.

A good credit score will help you qualify for a debt consolidation loan at a lower interest rate, making it less expensive overall for you to pay off your debts. The better your credit score, the more debt consolidation options you have.

But if you haven’t resolved the issue that got you into debt in the first place, debt consolidation can be risky.

When bankruptcy makes sense over debt consolidation

Lynch recommended speaking with a credit counselor or a bankruptcy attorney to evaluate your options if the amount of unsecured debt you’re responsible for exceeds about 20% of your income. But the decision to file bankruptcy ultimately comes down to an individual’s capacity for disciplined repayment.

“The best candidates for bankruptcy are those consumers who know what the consequences will be, know what property they may stand to lose — in the case of a Chapter 7 filer — and have done their best to determine what the 3 to 5 years of repayment would be like if they were to file Chapter 13,” said Lynch.

Consider your debts

Jeffrey Arevalo, an financial wellness expert at Greenpath Financial Wellness, recommended you consider your income, the types of debt you have and your assets in deciding if bankruptcy is right for you — and, if so, which type of bankruptcy you would need to file.

According to Arevalo, you should consider whether bankruptcy can help you with the kind of debt you’re dealing with in the first place; there are some debts, including student loans, child support, alimony and tax debts, that won’t be eligible for discharge in either a Chapter 7 or Chapter 13 filing.

Consider your assets

The assets you own may affect whether or not you opt for bankruptcy over debt consolidation, too. You may risk losing certain assets like secondary residence properties, valuable vehicles and other assets that aren’t exempt for sale under applicable state and federal law to pay off your debts if you file Chapter 7 bankruptcy. The rules vary by state, so check first to see what you’d risk losing if you file for Chapter 7.

On the other hand, a benefit of filing for Chapter 13 bankruptcy is that it gives you an opportunity to save your home from foreclosure or a car from repossession, if that’s a risk you’re facing.

Eligibility

Finally, filing would depend on whether or not you are eligible for bankruptcy.

“Based on bankruptcy guidelines in your state, if you make too much or too little of income it will determine whether or not you have the ability or inability to repay your debt,” said Arevalo.

To be eligible for Chapter 13 bankruptcy you must first:

  1. Have regular income
  2. The amount of secured debt (like a mortgage or auto loan) cannot be more than $1,184,200, and the amount of unsecured debt (like medical bills or credit card debt) cannot exceed $394,725

To be eligible for Chapter 7 bankruptcy you must prove you cannot afford your debt payments. To do so you must:

  1. Prove your monthly income is less than the median income in your state for your family size
  2. If you don’t pass the first requirement, the court will use another complex calculation to see whether your disposable income is enough to satisfy your debt obligations

Student loans

Filing for either type of bankruptcy won’t result in your student loans being discharged in most cases, according to the experts.

“Contrary to popular belief, both federal and private student loans can be discharged in bankruptcy, but the standards applied most often — the so-called ‘Brunner test’ — are difficult for many people to satisfy,” said Lynch.

To have student loans discharged, you have to file an adversary proceeding, a lawsuit filed in bankruptcy court. That’s when you have to pass what’s commonly referred to as the Brunner Test, meaning you must prove repayment would “impose undue hardship on you and your dependents.”

The following factors determine undue hardship:

  • Repaying the loan would not allow you to maintain a minimal living standard.
  • Evidence shows that the hardship will likely continue throughout much of the loan’s repayment period.
  • Good faith efforts were made towards loan payment prior to the bankruptcy filing.

The chances of any individual borrower passing the test are slim, according to John Colwell, president of the National Association of Consumer Bankruptcy Attorneys.

“You can sue and try to prove a hardship discharge in bankruptcy but the burden of proof on the debtor is very high,” Colwell said. On top of that, Colwell told MagnifyMoney, the process is an additional expense for an already cash-strapped debtor, who would have to pay a lawyer to file the lawsuit and combat an aggressive opposition from the student loan companies.

In February 2018, the U.S. Department of Education announced it would review the undue hardship definition, but, according to Lynch, “it’s even debatable whether that would have any real effect, as actual changes would have to come via Congress.”

Statute of limitations
Borrowers who have private student loans should remember private loans are generally subject to a state’s statute of limitations, Lynch added.

“If the statute has expired, there may be no need to include the loans in a bankruptcy filing,” said Lynch. He advised anyone considering bankruptcy with private loans to first speak with an experienced bankruptcy attorney who has had success with discharging student loans.

Repayment options
Student loans likely won’t be discharged in either type of bankruptcy. However, if you opt to file for Chapter 13 bankruptcy, the repayment plan may reduce your payment to something more manageable for your budget — or you may have no payment at all for three to five years as you pay down your debts.

If you have federal student loans and are struggling to make payments, it may be beneficial to contact your loan servicer and ask about forbearance, deferment or your eligibility for one of several repayment plans. Some private student loan companies offer similar options.

The bottom line

Understanding your mix of assets and and passing the eligibility test doesn’t necessarily mean bankruptcy is the best option for you over debt consolidation. And owning a house or having the credit score to qualify for a balance transfer credit card or personal loan doesn’t mean you should consolidate your debt.

If you understand the differences but are struggling to make up your mind or having trouble understanding your options, you should contact a professional. Lynch recommended speaking to multiple financial professionals, including a credit counselor or bankruptcy attorney, and weighing their recommendations before making a final decision.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Brittney Laryea
Brittney Laryea |

Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at [email protected]

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There are a lot of 0% APR credit card deals in your mailbox and online, but most of them slap you with a 3% to 4% fee just to make a transfer, which can seriously eat into your savings.

At MagnifyMoney we like to find deals no one else is showing, and we’ve searched hundreds of balance transfer credit card offers to find the banks and credit unions that ANYONE CAN JOIN which offer great 0% interest credit card deals AND no balance transfer fees. We’ve hand-picked them here.

If one 0% APR credit card doesn’t give you a big enough credit line you can try another bank or credit union for the rest of your debt. With several no fee options it’s not hard to avoid transfer fees even if you have a large balance to deal with.

1. The Amex EveryDay® Credit Card from American Express – Introductory 0% for 15 Months on balance transfers and purchases, $0 balance transfer fee.

This offer edges out competitors with its 0% intro period and standout perks. The Amex EveryDay® Credit Card from American Express has increased value with an intro 0% for 15 Months on purchases and balance transfers, then 14.99%-25.99% Variable APR and a $0 balance transfer fee. (For transfers requested within 60 days of account opening.) In addition to the great balance transfer offer, you can earn rewards — 2x points at US supermarkets, on up to $6,000 per year in purchases (then 1x), 1x points on other purchases.

The information related to The Amex EveryDay® Credit Card from American Express has been collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.

2. BankAmericard® credit card0% Introductory APR on purchases for 18 billing cycles, $0 Introductory Balance Transfer Fee

Cardholders can benefit from an 0% Introductory APR on purchases for 18 billing cycles and an introductory $0 balance transfer fee for the first 60 days your account is open. After that, the fee for future balance transfers is either $10 or 3% of the amount of each transaction, whichever is greater. Once the intro period ends, there is a 14.74% - 24.74% Variable APR. You can benefit from a $0 annual fee and access to your free FICO® Score.

The information related to BankAmericard® credit card has been collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.

When to consider a fee

While no-fee balance transfer cards are great, sometimes it may be worthwhile to consider a balance transfer card with a balance transfer fee. The fee will be a percentage — typically 3% or 5% — of the total amount you transfer, but cards that charge balance transfer fees often have longer intro periods. If you can’t afford the high monthly payments required to pay off your balance before the end of a 15-month intro period, a card offering a longer intro period — such as 18 months — can provide lower monthly payments while still allowing you to pay off your balance before the end of the intro period. Below, we provide an example that should help you decide when you should consider a fee.

For this example, we’re assuming $6,354 in credit card debt, which is the average balance Americans have, according to Experian’s 2017 State of Credit report.

By choosing the card offering an intro 0% for 18 months and a 3% transfer fee, you’ll only have to pay $364 a month to pay your debt and the balance transfer fee off in full during the intro period. That’s $60 less than the $424 monthly payment required by the card with an intro 0% for 15 months. Just beware that while you’re saving month to month, overall, you will end up paying about $190 more due to the balance transfer fee.

If you need a longer intro period and lower monthly payment, we recommend the Discover it® Balance Transfer which offers an intro 0% for 18 months on balance transfers (after that, 13.49% - 24.49% Variable APR) and has a 3% intro balance transfer fee, up to 5% fee on future balance transfers (see terms)*.

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Rates & Fees

Discover it® Balance Transfer

Intro BT APR
0% for 18 months
Regular APR
13.49% - 24.49% Variable
Balance Transfer Fee
3% intro balance transfer fee, up to 5% fee on future balance transfers (see terms)*
Credit required
good-credit
Excellent/Good

3. Chase Slate® – 0% Intro APR on Balance Transfers for 15 months and 0% Intro APR on Purchases for 15 months, $0 Introductory Balance Transfer Fee

This deal is easy to find – Chase is one of the biggest banks and makes this credit card deal well known. The card offers a 0% intro apr on balance transfers for 15 months and an intro $0 on transfers made within 60 days of account opening. after that: either $5 or 5%, whichever is greater. You also get a 0% Intro APR on Purchases for 15 months on purchases and a $0 annual fee. After the intro period, the APR is 16.74% - 25.49% Variable. Plus, you’ll receive monthly updates to your free FICO® Score and the reasons behind your score for free.’

The information related to the Chase Slate® has been collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.

4. Platinum Card from Navy Federal Credit Union – 0% introductory APR for 12 months on balance transfers, NO FEE

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The Platinum Card from Navy Federal Credit Union offers a 0% introductory APR for 12 months on balance transfers (after a 7.74% and 18.00% Variable APR). Note: This offer expires on Jan. 2, 2020. Since Navy Federal is a credit union, membership is required to open this card. You can qualify if you or one of your family or household members has ties to the armed forces, DoD or National Guard. Find out more about membership qualifications on Navy Federal.

5. Edward Jones World MasterCard® – Intro 0% for 12 billing cycles on balance transfers, NO FEE

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You’ll need to go to an Edward Jones branch to open up an account first if you want this deal. Edward Jones is an investment advisory company, so they’ll want to have a conversation about your retirement needs. But you don’t need to have money in stocks to be a customer of Edward Jones and try to get this card. Just beware that you only have 60 days to complete your transfer to lock in the intro 0% for 12 billing cycles, and after the intro period a 14.99% Variable APR applies.

6. Choice Rewards World MasterCard® from First Tech FCU – Intro 0% for 12 months on balance transfers, NO FEE

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Anyone can join First Tech Federal Credit Union by becoming a member of the Financial Fitness Association for $8, or the Computer History Museum for $15. You can apply for the card without joining first. The Choice Rewards World MasterCard® from First Tech FCU offers an intro 0% for 12 months on balances transferred within first 90 days of account opening and does not charge balance transfer fees. After the intro period, an APR of 11.99%-18.00% variable applies. You also Earn 20,000 Rewards Points when you spend $3,000 in your first two months.

7. Rewards Visa Card from La Capitol FCU – Intro 0% interest on balance transfers for 12 months*, NO FEE

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Anyone can join La Capitol Federal Credit Union by becoming a member of the Louisiana Association for Personal Financial Achievement, which costs $20. Just indicate that that’s how you want to be eligible when you apply for the card – no need to join before you apply. And La Capitol accepts members from all across the country, so you don’t have to live in Louisiana to take advantage of this deal on the Rewards Visa Card from La Capitol FCU. The card offers an introductory 0% interest on balance transfers for 12 months within first 90 days of account opening*. After the intro period, a 12.25%-18.00% variable APR applies.

8. Visa® Signature Credit Card from Purdue FCU – Intro 0% for 12 months on balance transfers and purchases, NO FEE

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The card offers an intro of 0% for 12 months. After the intro period ends, 11.50%-17.50% Fixed APR applies. The Purdue Federal Credit Union doesn’t have open membership, but one way to be eligible for credit union membership is to join the Purdue University Alumni Association as a Friend of the University.

Anyone can join the association, but it costs $50. The good news is you can apply and get a decision before you become a member of the Alumni Association.

9. Premier America Credit Union – 0% Intro APR for 6 months on balance transfers and purchases, NO FEE

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Premier America is unique because it has the Student Mastercard® from Premier America CU that’s eligible for the intro 0% for 6 months on balance transfers, though credit limits on that card are $500 – $2,000. There is an 11.25% Variable APR after the intro period. There’s also a card for those with no credit history – the Premier First Rewards Privileges® from Premier America CU, with limits of $1,000 – $2,000 and a 19.00% Variable APR. If you’re looking for a bigger line, the Premier Privileges Rewards Mastercard® from Premier America CU is available with limits up to $50,000 and a 8.45% - 17.95% Variable APR.

Anyone can join Premier America by becoming a member of the Alliance for the Arts. You can select that option when you apply.

Other 0% intro APR cards to consider

10. Visa Platinum Card from Money One FCU – as low as 0% intro APR for 6 months on balance transfers and purchases, NO FEE

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on Money One Federal’s secure website

Anyone can join Money One Federal by making a $20 donation to Gifts of Easter Seals. And you can apply without being a member. You’ll see a drop down option during the application process that lets you select Gifts of Easter Seals as the way you plan to become a member of the credit union. Credit lines for the Visa Platinum Card from Money One FCU are as high as $25,000. After the as low as 0% intro apr for 6 months, there’s a 8.75% to 18.00% Variable APR.

11. Andigo Credit Union – Intro 0% for 6 months on balance transfers and purchases, NO FEE

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You’ll have a choice to apply for the Visa Platinum Cash Back Card from Andigo, Visa Platinum Rewards Card from Andigo, or Visa Platinum Card from Andigo. The Visa Platinum Card from Andigo has a lower ongoing APR at 11.65% - 20.65% Variable, compared to 12.24% - 21.24% Variable for the Visa Platinum Cash Back Card from Andigo and 13.65% - 22.65% Variable for the Visa Platinum Rewards Card from Andigo. So, if you’re not sure you’ll pay it all off in 6 months, the Visa Platinum Card from Andigo is a better bet.

Anyone can join Andigo by making a donation to Connect Vets for $15, and you can submit an application for the card without being a member yet.

12. ETFCU's Platinum Rewards Credit Card – Intro 0% for 6 first billing cycles on balance transfers, NO FEE

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on Evansville Teachers Federal Credit Union’s secure website

You don’t need to be a teacher to join this credit union. Just make a $5 donation to Mater Dei Friends & Alumni Association. The ETFCU's Platinum Rewards Credit Card has an ongoing APR of 10.25% to 17.95% Variable, so you can enjoy a decent rate even after the intro deal ends.

13. Elements Financial Platinum Visa® Credit Card – Intro 0% for 6 months on balance transfers and purchases, NO FEE

Elements Financial Platinum Visa® Credit Card

APPLY NOW Secured

on ELFCU’s secure website

To become a member and apply, you’ll just need to join TruDirection, a financial literacy organization. It costs just $5 and you can join as part of the application process. The ongoing APR is 10.99% Variable which is lower than typical cards.

14. Justice Federal Credit Union – Intro 0% for 6 months on purchases, balance transfers, and cash advances, NO FEE

Student VISA® Rewards Credit Card from Justice FCU

APPLY NOW Secured

on Justice Federal Credit Union’s secure website

If you’re not a Department of Justice, Homeland Security, or U.S. court employee (or a few others), you need to join a law enforcement organization to be a member of Justice Federal. One of the eligible associations for membership is the National Native American Law Enforcement Association. It costs $15 to join.

You can apply as a non-member online to get a decision before joining. And Justice is unique in that the Student VISA® Rewards Credit Card from Justice FCU is also eligible for the intro 0% for 6 months on purchases, balance transfers, and cash advances. So, if your credit history is limited and you’re trying to deal with a balance on your very first card, this could be an option. The APR after the intro period ends is 16.90% fixed.

15. Platinum Visa Card from Michigan State FCU – Intro 0% for 6 months on balance transfers, NO FEE

Platinum Visa Card from Michigan State FCU

APPLY NOW Secured

on Michigan State University Federal Credit Union’s secure website

There is the option to apply for the Cash Back Platinum Plus Visa Credit Card from Michigan State FCU or the Platinum Visa Card from Michigan State FCU. The Platinum Visa Card from Michigan State FCU has a lower ongoing APR at 9.90% APR - 17.90% variable, compared to the 13.90% APR - 17.90% variable APR for the Cash Back Platinum Plus Visa Credit Card from Michigan State FCU which can earn 1% cash back on all purchases. Anyone can join the Michigan State University Federal Credit Union by first becoming a member of the Michigan United Conservation Clubs. However, this comes at a high fee of $30 for one year.

Are these the best deals for you?

If you can pay off your debt within the 0% period, then yes, a no fee 0% balance transfer credit card is your absolute best bet. And if you can’t, you can hope that other 0% deals will be around to switch again.

But if you’re unsure, you might want to consider…

  • A deal that has a longer period before the rate goes up. In that case, a balance transfer fee could be worth it to lock in a 0% rate for longer.
  • Or, a card with a rate a little above 0% that could lock you into a low rate even longer.

The good news is we can figure it out for you.

Our handy, free balance transfer tool lets you input how much debt you have, and how much of a monthly payment you can afford. It will run the numbers to show you which offers will save you the most for the longest period of time.

promo balancetransfer wide

The savings from just one balance transfer can be substantial.

Let’s say you have $5,000 in credit card debt, you’re paying 18% in interest, and can afford to pay $200 a month on it. Here’s what you can save with a 0% deal:

  • 18%: It will take 32 months to pay off, with $1,312 in interest paid.
  • 0% for 12 months: You’ll pay it off in 28 months, with just $502 in interest, saving you $810 in cash. That even assumes your rate goes back up to 18% after 12 months!

But your rate doesn’t have to go up after 12 months. If you pay everything on time and maintain good credit, there’s a great chance you’ll be able to shop around and find another bank willing to offer you 0% interest again, letting you pay it off even faster.

Before you do any balance transfer though, make sure you follow these 6 golden rules of balance transfer success:

  • Never use the card for spending. You are only ready to do a balance transfer once you’ve gotten your budget in order and are no longer spending more than you earn. This card should never be used for new purchases, as it’s possible you’ll get charged a higher rate on those purchases.
  • Have a plan for the end of the promotional period. Make sure you set a reminder on your phone calendar about a month or so before your promotional period ends so you can shop around for a low rate from another bank.
  • Don’t try to transfer debt between two cards of the same bank. It won’t work. Balance transfer deals are meant to ‘steal’ your balance from a competing bank, not lower your rate from the same bank. So if you have a Chase card with a high rate, don’t apply for another Chase card like a Chase Slate® and expect you can transfer the balance. Apply for one from another bank.
  • Get that transfer done within 60 days. Otherwise your promotional deal may expire unused.
  • Never use a card at an ATM. You should never use the card for spending, and getting cash is incredibly expensive. Just don’t do it with this or any credit card.
  • Always pay on time. If you pay more than 30 days late your credit will be hurt, your rate may go up, and you may find it harder to find good deals in the future. Only do balance transfers if you’re ready to pay at least the minimum due on time, every time.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Alexandria White
Alexandria White |

Alexandria White is a writer at MagnifyMoney. You can email Alexandria at [email protected]

MagnifyMoney

Advertiser Disclosure

Balance Transfer, Best of, Pay Down My Debt

Best 0% APR Credit Card Offers – November 2019

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any credit card issuer. This site may be compensated through a credit card issuer partnership.

There are a lot of 0% APR credit card deals in your mailbox and online, but most of them slap you with a 3 to 4% fee just to make a transfer, and that can seriously eat into your savings.

At MagnifyMoney we like to find deals no one else is showing, and we’ve searched hundreds of balance transfer credit card offers to find the banks and credit unions that ANYONE CAN JOIN which offer great 0% interest credit card deals AND no balance transfer fees. We’ve hand-picked them here.

If one 0% APR credit card doesn’t give you a big enough credit line you can try another bank or credit union for the rest of your debt. With several no fee options it’s not hard to avoid transfer fees even if you have a large balance to deal with.

1. The Amex EveryDay® Credit Card from American Express – Introductory 0% for 15 Months on balance transfers and purchases, $0 balance transfer fee.

This offer edges out competitors with the longest 0% intro period and standout perks. The Amex EveryDay® Credit Card from American Express has increased value with an intro 0% for 15 Months on purchases and balance transfers, then 14.99%-25.99% Variable APR and a $0 balance transfer fee. (For transfers requested within 60 days of account opening.) In addition to the great balance transfer offer, you can earn rewards — 2x points at US supermarkets, on up to $6,000 per year in purchases (then 1x), 1x points on other purchases.

The information related to The Amex EveryDay® Credit Card from American Express has been collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.

2. BankAmericard® credit card0% Introductory APR on purchases for 18 billing cycles, $0 Introductory Balance Transfer Fee

Cardholders can benefit from an 0% Introductory APR on purchases for 18 billing cycles and an introductory $0 balance transfer fee for the first 60 days your account is open. After that, the fee for future balance transfers is either $10 or 3% of the amount of each transaction, whichever is greater. Once the intro period ends, there is a 14.74% - 24.74% Variable APR. You can benefit from a $0 annual fee and access to your free FICO® Score.

The information related to BankAmericard® credit card has been collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.

When to consider a fee

While no-fee balance transfer cards are great, sometimes it may be worthwhile to consider a balance transfer card with a balance transfer fee. The fee will be a percentage — typically 3% or 5% — of the total amount you transfer, but cards that charge balance transfer fees often have longer intro periods. If you can’t afford the high monthly payments required to pay off your balance before the end of a 15-month intro period, a card offering a longer intro period — such as 18 months — can provide lower monthly payments while still allowing you to pay off your balance before the end of the intro period. Below, we provide an example that should help you decide when you should consider a fee.

For this example, we’re assuming $6,354 in credit card debt, which is the average balance Americans have, according to Experian’s 2017 State of Credit report.

By choosing the card offering an intro 0% for 18 months and a 3% transfer fee, you’ll only have to pay $364 a month to pay your debt and the balance transfer fee off in full during the intro period. That’s $60 less than the $424 monthly payment required by the card with an intro 0% for 15 months. Just beware that while you’re saving month to month, overall, you will end up paying about $190 more due to the balance transfer fee.

If you need a longer intro period and lower monthly payment, we recommend the Discover it® Balance Transfer or the Wells Fargo Platinum card. The Discover it® Balance Transfer offers an intro 0% for 18 months on balance transfers (after, 13.49% - 24.49% Variable APR) and has a 3% intro balance transfer fee, up to 5% fee on future balance transfers (see terms)*

The Wells Fargo Platinum card has an intro 0% for 18 months on qualifying balance transfers and has a 3% for 120 days, then 5% balance transfer fee. After the intro period, it has a 16.99%-26.49% (Variable) APR.

Discover it® Balance Transfer

APPLY NOW Secured

on Discover Bank’s secure website

Rates & Fees

Discover it® Balance Transfer

Intro BT APR
0% for 18 months
Regular APR
13.49% - 24.49% Variable
Balance Transfer Fee
3% intro balance transfer fee, up to 5% fee on future balance transfers (see terms)*
Credit required
good-credit
Excellent/Good

Wells Fargo Platinum card

The information related to Wells Fargo Platinum card has been collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication. Terms Apply.

Wells Fargo Platinum card

Intro Purchase APR
0% for 18 months
Intro BT APR
0% for 18 months on qualifying balance transfers
Regular Purchase APR
16.99%-26.49% (Variable)
Annual fee
$0
Credit required
good-credit
Excellent/Good

3. Chase Slate® – 0% Intro APR on Balance Transfers for 15 months and 0% Intro APR on Purchases for 15 months, $0 Introductory Balance Transfer Fee

This deal is easy to find – Chase is one of the biggest banks and makes this credit card deal well known. Save with a 0% intro apr on balance transfers for 15 months and intro $0 on transfers made within 60 days of account opening. after that: either $5 or 5%, whichever is greater. You also get a 0% Intro APR on Purchases for 15 months on purchases and balance transfers, and $0 annual fee. After the intro period, the APR is currently 16.74% - 25.49% Variable. Plus, see monthly updates to your free FICO® Score and the reasons behind your score for free.’

The information related to the Chase Slate® has been collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.

4. Platinum Card from Navy Federal Credit Union – 0% introductory APR for 12 months on balance transfers, NO FEE

Platinum Card from Navy Federal Credit Union

APPLY NOW Secured

on Navy Federal Credit Union’s secure website

The Platinum Card from Navy Federal Credit Union offers a 0% introductory APR for 12 months on balance transfers (after a 7.74% and 18.00% Variable APR). Note: This offer expires on Jan. 2, 2020. Since Navy Federal is a credit union, membership is required to open this card. You can qualify if you or one of your family or household members has ties to the armed forces, DoD or National Guard. Find out more about membership qualifications on Navy Federal.

5. Edward Jones World MasterCard® – Intro 0% for 12 billing cycles on balance transfers, NO FEE

Edward Jones World MasterCard®

APPLY NOW Secured

on Edward Jones’s secure website

You’ll need to go to an Edward Jones branch to open up an account first if you want this deal. Edward Jones is an investment advisory company, so they’ll want to have a conversation about your retirement needs. But you don’t need to have money in stocks to be a customer of Edward Jones and try to get this card. Just beware that you only have 60 days to complete your transfer to lock in the intro 0% for 12 billing cycles, and after the intro period a 14.99% Variable APR applies.

6. Choice Rewards World MasterCard® from First Tech FCU – Intro 0% for 12 months on balance transfers, NO FEE

Choice Rewards World MasterCard® from First Tech FCU

APPLY NOW Secured

on First Technology Federal Credit Union’s secure website

Anyone can join First Tech Federal Credit Union by becoming a member of the Financial Fitness Association for $8, or the Computer History Museum for $15. You can apply for the card without joining first. The intro 0% for 12 months and no transfer fee on balances transferred within first 90 days of account opening is for the Choice Rewards World MasterCard® from First Tech FCU. After the intro period, an APR of 11.99%-18.00% variable applies. You also Earn 20,000 Rewards Points when you spend $3,000 in your first two months.

7. Rewards Visa Card from La Capitol FCU – Intro 0% interest on balance transfers for 12 months on balance transfers, NO FEE

Rewards Visa Card from La Capitol FCU

APPLY NOW Secured

on La Capitol Federal Credit Union’s secure website

Anyone can join La Capitol Federal Credit Union by becoming a member of the Louisiana Association for Personal Financial Achievement, which costs $20. Just indicate that’s how you want to be eligible when you apply for the card – no need to join before you apply. And La Capitol accepts members from all across the country, so you don’t have to live in Louisiana to take advantage of this deal on the Rewards Visa Card from La Capitol FCU. The introductory 0% interest on balance transfers for 12 months on balance transfers applies to balances transferred within first 90 days of account opening. After the intro period, a 12.25%-18.00% variable APR applies.

8. Visa® Signature Credit Card from Purdue FCU – Intro 0% for 12 months on balance transfers and purchases, NO FEE

Visa® Signature Credit Card from Purdue FCU

APPLY NOW Secured

on Purdue FCU’s secure website

The intro 0% for 12 months offer is only for their Visa® Signature Credit Card – other cards have a higher intro rate. After the intro period ends, 11.50%-17.50% Fixed APR applies. The Purdue Federal Credit Union doesn’t have open membership, but one way to be eligible for credit union membership is to join the Purdue University Alumni Association as a Friend of the University.

Anyone can join the association, but it costs $50. The good news is you can apply and get a decision before you become a member of the Alumni Association.

9. Premier America Credit Union – 0% Intro APR for 6 months on balance transfers and purchases, NO FEE

Premier Privileges Rewards Mastercard® from Premier America CU

APPLY NOW Secured

on Premier America Credit Union’s secure website

Premier America is unique because it has the Student Mastercard® from Premier America CU that’s eligible for the intro 0% for 6 months on balance transfers, though credit limits on that card are $500 – $2,000. There is an 11.25% Variable APR after the intro period. There’s also a card for those with no credit history – the Premier First Rewards Privileges® from Premier America CU, with limits of $1,000 – $2,000 and a 19.00% Variable APR. If you’re looking for a bigger line, the Premier Privileges Rewards Mastercard® from Premier America CU is available with limits up to $50,000 and a 8.45% - 17.95% Variable APR.

Anyone can join Premier America by becoming a member of the Alliance for the Arts. You can select that option when you apply.

Other 0% intro APR cards to consider

10. Visa Platinum Card from Money One FCU – as low as 0% intro APR for 6 months on balance transfers and purchases, NO FEE

Visa Platinum Card from Money One FCU

APPLY NOW Secured

on Money One Federal’s secure website

Anyone can join Money One Federal by making a $20 donation to Gifts of Easter Seals. And you can apply without being a member. You’ll see a drop down option during the application process that lets you select Gifts of Easter Seals as the way you plan to become a member of the credit union. Credit lines for the Visa Platinum Card from Money One FCU are as high as $25,000. After the as low as 0% intro apr for 6 months, there’s a 8.75% to 18.00% Variable APR.

11. Andigo Credit Union – Intro 0% for 6 months on balance transfers and purchases, NO FEE

Visa Platinum Card from Andigo

APPLY NOW Secured

on Andigo’s secure website

You’ll have a choice to apply for the Visa Platinum Cash Back Card from Andigo, Visa Platinum Rewards Card from Andigo, or Visa Platinum Card from Andigo. The Visa Platinum Card from Andigo has a lower ongoing APR at 11.65% - 20.65% Variable, compared to 12.24% - 21.24% Variable for the Visa Platinum Cash Back Card from Andigo and 13.65% - 22.65% Variable for the Visa Platinum Rewards Card from Andigo. So, if you’re not sure you’ll pay it all off in 6 months, the Visa Platinum Card from Andigo is a better bet.

Anyone can join Andigo by making a donation to Connect Vets for $15, and you can submit an application for the card without being a member yet.

12. ETFCU's Platinum Rewards Credit Card – Intro 0% for 6 first billing cycles on balance transfers, NO FEE

ETFCU's Platinum Rewards Credit Card

APPLY NOW Secured

on Evansville Teachers Federal Credit Union’s secure website

You don’t need to be a teacher to join this credit union. Just make a $5 donation to Mater Dei Friends & Alumni Association. The ETFCU's Platinum Rewards Credit Card has an ongoing APR of 10.25% to 17.95% Variable, so you can enjoy a decent rate even after the intro deal ends.

13. Elements Financial Platinum Visa® Credit Card – Intro 0% for 6 months on balance transfers and purchases, NO FEE

Elements Financial Platinum Visa® Credit Card

APPLY NOW Secured

on ELFCU’s secure website

To become a member and apply, you’ll just need to join TruDirection, a financial literacy organization. It costs just $5 and you can join as part of the application process. The ongoing APR is 10.99% Variable which is lower than typical cards.

14. Justice Federal Credit Union – Intro 0% for 6 months on purchases, balance transfers, and cash advances, NO FEE

Student VISA® Rewards Credit Card from Justice FCU

APPLY NOW Secured

on Justice Federal Credit Union’s secure website

If you’re not a Department of Justice, Homeland Security, or U.S. court employee (or a few others), you need to join a law enforcement organization to be a member of Justice Federal. One of the eligible associations for membership is the National Native American Law Enforcement Association. It costs $15 to join.

You can apply as a non-member online to get a decision before joining. And Justice is unique in that the Student VISA® Rewards Credit Card from Justice FCU is also eligible for the intro 0% for 6 months on purchases, balance transfers, and cash advances. So, if your credit history is limited and you’re trying to deal with a balance on your very first card, this could be an option. The APR after the intro period ends is 16.90% fixed.

15. Platinum Visa Card from Michigan State FCU – Intro 0% for 6 months on balance transfers, NO FEE

Platinum Visa Card from Michigan State FCU

APPLY NOW Secured

on Michigan State University Federal Credit Union’s secure website

There is the option to apply for the Cash Back Platinum Plus Visa Credit Card from Michigan State FCU or the Platinum Visa Card from Michigan State FCU. The Platinum Visa Card from Michigan State FCU has a lower ongoing APR at 9.90% APR - 17.90% variable, compared to the 13.90% APR - 17.90% variable APR for the Cash Back Platinum Plus Visa Credit Card from Michigan State FCU which can earn 1% cash back on all purchases. Anyone can join the Michigan State University Federal Credit Union by first becoming a member of the Michigan United Conservation Clubs. However, this comes at a high fee of $30 for one year.

Are these the best deals for you?

If you can pay off your debt within the 0% period, then yes, a no fee 0% balance transfer credit card is your absolute best bet. And if you can’t, you can hope that other 0% deals will be around to switch again.

But if you’re unsure, you might want to consider…

  • A deal that has a longer period before the rate goes up. In that case, a balance transfer fee could be worth it to lock in a 0% rate for longer.
  • Or, a card with a rate a little above 0% that could lock you into a low rate even longer.

The good news is we can figure it out for you.

Our handy, free balance transfer tool lets you input how much debt you have, and how much of a monthly payment you can afford. It will run the numbers to show you which offers will save you the most for the longest period of time.

promo balancetransfer wide

The savings from just one balance transfer can be substantial.

Let’s say you have $5,000 in credit card debt, you’re paying 18% in interest, and can afford to pay $200 a month on it. Here’s what you can save with a 0% deal:

  • 18%: It will take 32 months to pay off, with $1,312 in interest paid.
  • 0% for 12 months: You’ll pay it off in 28 months, with just $502 in interest, saving you $810 in cash. That even assumes your rate goes back up to 18% after 12 months!

But your rate doesn’t have to go up after 12 months. If you pay everything on time and maintain good credit, there’s a great chance you’ll be able to shop around and find another bank willing to offer you 0% interest again, letting you pay it off even faster.

Before you do any balance transfer though, make sure you follow these 6 golden rules of balance transfer success:

  • Never use the card for spending. You are only ready to do a balance transfer once you’ve gotten your budget in order and are no longer spending more than you earn. This card should never be used for new purchases, as it’s possible you’ll get charged a higher rate on those purchases.
  • Have a plan for the end of the promotional period. Make sure you set a reminder on your phone calendar about a month or so before your promotional period ends so you can shop around for a low rate from another bank.
  • Don’t try to transfer debt between two cards of the same bank. It won’t work. Balance transfer deals are meant to ‘steal’ your balance from a competing bank, not lower your rate from the same bank. So if you have a Chase credit card with a high rate, don’t apply for another Chase card like a Chase Slate® and expect you can transfer the balance. Apply for one from another bank.
  • Get that transfer done within 60 days. Otherwise your promotional deal may expire unused.
  • Never use a card at an ATM. You should never use the card for spending, and getting cash is incredibly expensive. Just don’t do it with this or any credit card.
  • Always pay on time. If you pay more than 30 days late your credit will be hurt, your rate may go up, and you may find it harder to find good deals in the future. Only do balance transfers if you’re ready to pay at least the minimum due on time, every time.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Alexandria White
Alexandria White |

Alexandria White is a writer at MagnifyMoney. You can email Alexandria at [email protected]

MagnifyMoney