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Home Equity Loan or Personal Loan: How to Choose the Right Fit for You

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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Updated – December 6, 2018

For homeowners in need of some financial flexibility, a personal loan or a home equity loan can provide extra cash for financing an education, dealing with an unexpected emergency, or making home improvements. Both loan types offer different benefits as well as different risks, so it’s important to weigh your options before borrowing.

Personal loan vs. home equity loan

Personal loans and home equity loans offer different options for customers who need access to a larger amount of cash than they have on hand. While the end result of a successful application is the same (ready access to funds in a lump-sum payment), the process and the finer details are considerably different.

The primary difference between a personal loan and a home equity loan is that personal loans do not typically require collateral, whereas a home equity loan does. You may have heard lenders call this type of financing a signature loan or unsecured loan because in these types of transactions, your word is your bond (via a legally-binding contract, of course.)

Home equity loans are based on the amount of equity (the difference between what you owe and the value of your property) you have in your house. There are a few other differences regarding how the loan is structured and the loan cost, which is detailed in the chart below.

 Personal loanHome equity loan

Requires collateral?

No

Yes

Interest rates

As low as 3.99%

4.25% to 6%

Loan cost

There may be some fees, such as an origination fee or prepayment penalties.

In addition to a loan origination fee, borrowers may have to pay an appraisal fee, title report fee and notary fee.

How much money can you borrow?

The amount is based on your income and credit history.

The amount is based on the equity in your home. Typically maxes out at 70% to 80% or total loan to value.

Restrictions on use

No

Only if you care about a tax write-off.

Tax Benefits

No

Yes. If the money is used to make improvements to the home.

Rates sourced from LendingTree.com, which owns MagnifyMoney.

How personal loans work

When you take out a personal loan, the lender offers a lump-sum cash payment. Most personal loans can be used for anything you want. Common uses include:

Talk with your lender to find out if they have specific procedures for handling this type of personal loan.

Personal loans are widely available. It is imperative that you take your time doing research. Some of the personal loans you’ll find online may be nothing more than payday loans in disguise (with interest rates that can creep into triple digits).

Interest rates

If you want the best rates, you should work with a trusted lender. Many banks, credit unions and credit card companies even offer an online application process, so you can take advantage of the convenience of an online application while saving money.

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APR

As low as 3.99%

Credit Req.

Minimum 500 FICO®

Minimum Credit Score

Terms

24 to 60

months

Origination Fee

Varies

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A Personal Loan can offer funds relatively quickly once you qualify you could have your funds within a few days to a week. A loan can be fixed for a term and rate or variable with fluctuating amount due and rate assessed, be sure to speak with your loan officer about the actual term and rate you may qualify for based on your credit history and ability to repay the loan. A personal loan can assist in paying off high-interest rate balances with one fixed term payment, so it is important that you try to obtain a fixed term and rate if your goal is to reduce your debt. Some lenders may require that you have an account with them already and for a prescribed period of time in order to qualify for better rates on their personal loan products. Lenders may charge an origination fee generally around 1% of the amount sought. Be sure to ask about all fees, costs and terms associated with each loan product. Loan amounts of $1,000 up to $50,000 are available through participating lenders; however, your state, credit history, credit score, personal financial situation, and lender underwriting criteria can impact the amount, fees, terms and rates offered. Ask your loan officer for details.

As of 28-Feb-2019, LendingTree Personal Loan consumers were seeing match rates as low as 3.99% (3.99% APR) on a $10,000 loan amount for a term of three (3) years. Rates and APRs were based on a self-identified credit score of 700 or higher, zero down payment, origination fees of $0 to $100 (depending on loan amount and term selected).

Interest rates vary from lender to lender, but they also vary from state to state. State usury laws dictate the maximum interest rates on various loan types, but each state offers different exemptions. For example, Arkansas caps interest rates on consumer loans at 17% per year, but in Utah, the legal rate is 10%, unless parties agree to different terms. For this reason, make sure you take the time to read the details of any financial agreement you are prepared to sign.

According to the Federal Reserve, personal loan interest rates averaged 10.1% at the end of August. Your credit score, loan amount, home state and credit history could affect those numbers.

As mentioned earlier, most personal loans don’t require collateral, but lenders make up for the added risk with higher interest rates than you’ll typically find on home equity loans.

Unsecured personal loans are a little harder to get than other types of loans (such as a title loan or a home equity loan) because the lender is allowing you to borrow money based solely on the information they get about you. If you have a lot of debt or a very low credit score, you may find it difficult to get a personal loan, or you’ll have to consider a higher interest rate.

Terms and fees

For true personal loans, expect loan terms up to five years. Personal loans are also fixed rate, which means your interest rate (and your payment) will stay the same throughout the life of the loan.

Some lenders charge an origination fee, loan insurance and/or prepayment penalties. Make sure to talk to your lender about their specific requirements before moving forward.

The application process is fairly straightforward. You’ll fill out some personal information and provide financial documents to show you can afford the monthly payments. Depending on your lender and the type of loan you are seeking, you could have access to the money in as little as 24 hours, though some loans could take up to a week.

Personal loans are a good option for borrowers who need access to cash fairly quickly but don’t have home equity and/or don’t want to pay the higher interest rates on most credit cards.

ProsCons

No collateral required

Slightly higher interest rates

Easy application process

Tougher credit history requirements

Lots of lenders available

Potential to run into very unfavorable terms

Cash available within a day or two

Average loan amounts are fairly low

How home equity loans work

A home equity loan operates differently than a personal loan because the lender looks at how much equity you have in your property. Then, they do a little number magic and offer a loan amount based on the loan-to-value rate.

One of the biggest benefits of a home equity loan is that it can provide access to a large sum of money. The equity of your home is determined by calculating the home’s current market value and subtracting any liens against the property (like your mortgage). If you purchased a home for $350,000 and still owe $100,000 on the property and you have no other liens (such as a second mortgage), your equity would be $250,000. If you run up against a major emergency, access to this type of money could very valuable.

To qualify for a home equity loan there are two major requirements:

  1. You must own a home.
  2. You must have equity in that home.

Your lender will check your payment history and some other financial information as well.
Documents you may be required to provide include:

  • Proof you own the home
  • Pay stubs and/or two years of tax returns
  • Tax assessments
  • Mortgage statements
  • List of debts (if using the money to consolidate your bills)
  • A form showing the value of your home

Borrowers should know that the maximum lenders will allow you to borrow is typically 85-90% of your equity. (So if you have $100,000 in equity, the most lenders would allow you to take out is $85,000-90,000, though many lenders prefer closer to 80% or less.)

A major drawback for this type of loan is that you are using your home as collateral. That means if you are unable to make your payments, you could lose your house. Another risk is that your home could drop in value, putting you underwater on your property.

Interest rates

Home equity loans may offer lower interest rates (because you are putting your home up as collateral, there is less risk for the lender), but they often come with closing costs and loan origination fees, which can eat into your borrowing power.

Like personal loans, home equity loans have a fixed-interest rate, which means you’ll know how much you have to pay every month for the term of your loan. A home equity loan provides a lump-sum payment (like a personal loan). Home equity loans tend to have slightly longer terms than personal loans (between five and 15 years).

Be aware that a home equity loan and a home equity line of credit are similar, but not the same, so make sure you know which one you are applying for if you decide to move forward.

Terms and fees

Some fees you may see when applying for a home equity loan include an appraisal fee (lenders use an appraiser for a more accurate home value estimate.) The fee will vary based on your lender but can cost between $300 and $400.

Your lender may also charge a title search fee (around $100), a credit report fee, lawyer and documentation fees and notary fees. Many lenders charge an origination fee, but some will waive this charge. These little fees can easily add up to $1,000 or more.

Money from a home equity loan can be used for any purpose from medical expenses to home repairs. However, recent tax changes made the tax incentives on these types of loans a little less attractive for borrowers.

The new rules stipulate that in order to qualify for tax deductions, the money must be used to substantially improve a property. Further, since tax deductions increased, you may not even need to itemize your deductions.

Homeowners can apply for a home equity loan through their original lender, but it’s not a requirement. The Federal Trade Commission recommends talking to several lenders and trying to get the best deal by letting them know you’re shopping around.

If you decide after signing for a home equity loan that you’ve changed your mind, federal law provides a three-day grace period where a borrower can cancel the agreement without a penalty. You’ll have to submit the notice in writing.

A home equity loan will take longer than a personal loan (typically two to four weeks). The timeline is longer because the loan process is more complex.

Borrowers who need access to a large amount of money and/or want to take advantage of some of the tax benefits may find the home equity loan attractive. Since this type of loan puts your house at risk, make sure to do the proper research and really study your finances to determine if this type of loan works for you.

ProsCons

Potential for access to a lot of credit

Takes 2 to 4 weeks to get funds

Lower interest rates than credit card or personal loan

More expensive upfront costs

Fixed interest rates

Your home is collateral

There are potential tax benefits for a home equity loan

The tax restrictions only apply to funds used to make significant improvements on the home.

Personal loan vs. home equity loan: Which is better?

There are benefits and risks to both a personal loan and a home equity loan. For borrowers who have a lot of equity in their home and know they can make the loan payments in addition to their mortgage payments, a home equity loan offers lower interest rates, which could mean lower payments and a lower loan cost over time. However, if you are uncomfortable putting your home up as collateral, can’t afford the upfront costs of a home equity loan or don’t need access to a lot of cash, a personal loan may be a better option.

No matter what you choose, make sure to ask your lender a lot of questions and don’t be afraid to shop around to get the best deal.

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.

Angela Brown
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Angela Brown is a writer at MagnifyMoney. You can email Angela here

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Best and Worst States for Veterans

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Military service is tough and taxing, and many service members hope for an effortless re-entry into a civilian lifestyle.

But where veterans settle down after their service could play a big role in how smooth that transition really is. Even if they’re a couple years (or decades) out from their period of military service, the frequent moves of a military lifestyle means veterans could be less daunted by the prospect of relocating for a better quality of life.

We wanted to identify the best states for veterans, where they are more likely to find better opportunities and outcomes. We surveyed and ranked each city on several factors relevant to U.S. veterans:

  • Veteran population, both currently and in projected changes.
  • Veterans Affairs (VA) administration score, calculated based on the number of VA centers per enrollees in the state and patient ratings of these local VA facilities.
  • Veterans’ economic outcomes, measured by the median income for veterans, unemployment rates for veterans in the workforce and the median annual property taxes for home-owning veterans.

Here’s a look at our findings on the best states for veterans, and the worst. Hover over the map below to see whether your state is veteran-friendly.

Key takeaways

  • North Dakota takes the top spot with a final score of 67.9, thanks mostly to a deep satisfaction with VA services.
  • Hawaii and Wyoming rank second and third, with respective scores of 67.7 and 67.1. Economic opportunities for veterans in Hawaii are among the best (and the weather can’t hurt either!). And though Wyoming isn’t a star in any specific category, it performs solidly across the metrics we considered.
  • New Jersey comes in last on our list, due to high property taxes and a small population of veterans — its final score was 22.8.
  • New York and California fill out the bottom three, with final scores of 28.1 and 29.9. Vets make up a small portion of the New York’s population and property taxes are high, while Californian vets are not happy with their VA services.
  • Alaska is the state where you’re most likely to have a vet as a neighbor. Thirteen percent of adults residing in Alaska have served in the Armed Forces, and it’s the only state where the Department of Veterans Affairs doesn’t expect the veteran population to shrink.
  • Virginia boasts the highest incomes for veterans, most likely due to lucrative Department of Defense contractor opportunities.
  • Veterans in Vermont love their VA services more than any other state. Tennesseans, on the other hand, are the most dissatisfied with their VA services.

The 10 best states for veterans

Among the 10 best states for veterans, people with a history of military service are likely to have some key benefits.

They’re more likely to have access to a strong veteran community, accessible and higher-quality Veterans affair services and property tax policies that favor former members of the military. Veterans in these states also tend to earn more and face lower rates of workforce unemployment.

Here’s a closer look at what sets these states apart from others.

Strong veteran communities

The 10 best states for veterans have large veteran communities compared to other states. This is an important factor as the percentage of Americans who are veterans fell from 18% in 1980 to just 7% in 2016, per the Pew Research Center.
Alaska’s veteran community is the only one that’s expected to hold steady year over year. Alaska also has the largest veteran community, equal to 13.1% of its adult population. Other top states that scored favorably on veteran population factors include Wyoming, Virginia and Hawaii.

Accessible, high-quality VA services
These states also provide a higher quantity and quality of VA health care and services.

Vermont is the state that scores the best across all factors, scoring an impressive 91.3 in this category. Vermont and Wyoming had the highest patient ratings for both VA primary and specialty care facilities.

Wyoming has the most VA outpatient and inpatient facilities per capita, at 53.1 per 100,000 enrollees.

More economic advantages
Lastly, the best states for veterans provide these residents with better employment opportunities and ease the financial burdens of homeownership.

  • Virginia has the highest median income among veterans of any top state at $53,435. Alaska is close behind, with veterans earning a median income of $53,023.
  • Vermont and Idaho are the top states with the lowest workforce unemployment rates among veterans, at 2.2% and 2.4% respectively.
  • Among the best states, veterans pay the lowest property taxes, dollar for dollar, in Idaho and Wyoming. The median property tax range for vets in both states is $1,200 to $1,299.

These factors add up to better access to favorable financial conditions for veterans that can help them get ahead. Combine these with a robust veteran community and reliable VA services, and it’s clear how these 10 states provide veterans with a leg up in life.

10 worst states for veterans

Then there are the 10 worst states for veterans, where this population has fewer advantages and factors working in their favor. Here’s a look at the 10 worst states and the factors that pushed them to the bottom of the pack.

  • New Jersey and New York have the smallest veterans communities, accounting for less than 6% of each state’s populations. New Jersey also had the fastest-declining veteran population, shrinking by 3.7% per year.
  • Tennessee and Texas had the lowest VA services scores. Texas had the fewest VA facilities per capita among the worst states, at just 11.8 per 100,000 VA enrollees. Meanwhile, Tennessee had some of the lowest VA patient satisfaction ratings.
  • New Jersey, Oregon and New York fared the worst among our measures of local veterans’ economic opportunities, but New Jersey was the standout. Of the worst states, New Jersey had the highest unemployment rate among veteran workers at 6.2%. Veterans in New Jersey also faced sky-high property taxes, with a median of $7,000 to $7,999 — a full 16% of the state’s $43,994 annual median income among veterans.

See the table below for a full view of why each of these 10 worst states for veterans earned its unfortunate spot.

Understanding these rankings

To determine which states were best for veterans, we looked at eight metrics broken into three categories:

  • Veteran population score. This includes the percentage of the state’s adult population who are veterans and year-over-year change in the number of veterans, as predicted by the Department of Veterans Affairs. This indicates how attractive states are to veterans, and also suggests that the specific needs of veterans are more likely to be considered as a matter of state policy and community priority.
  • Veterans Affairs administration score. This includes the number of inpatient, outpatient and VA centers per 100,000 VA enrollees and patient ratings for VA primary care providers and specialist providers. The quality and availability of VA care is a major concern for all Americans, but it’s clear from the data that veterans have very different experiences in different states.
  • Economic score. This includes the median income for veterans, the veteran unemployment rates and the median property tax bill for veterans who own their homes. Some state, county and local governments offer special property tax rates, depending on a variety of factors, such as disability or combat status.

See our full rankings

What if your state didn’t rank among the 10 best or worst for veterans? The table below provides the complete rankings and scoring for all 50 states.

How veterans can manage money in post-military life

For veterans, making ends meet isn’t always easy. As a veteran, one of the first places to turn for financial help is your service-related benefits and perks. Take full advantage of the benefits and entitlements you earned through your military service:

  • The VA offers comprehensive health care and coverage for veterans.
  • Veterans who become disabled in combat are also entitled to additional benefits and assistance.
  • The Post-9/11 GI Bill provides financial assistance for education and living costs for up to 36 months for veterans enrolled in college or a vocational training or certification program.
  • VA loans may help many veterans access an affordable mortgage to purchase a home with little or no down payment.
  • Many states also offer benefits to their local veterans, from a tax break on your military retirement income to additional housing assistance for disabled veterans. Check with your state’s veterans department to see what local benefits are available.
  • Many nonprofits provide additional assistance and grants to vets, such as USA Cares,The American Legion and Veterans of Foreign Wars.

Debt can also be a major burden on veterans, with 92.5% of military and veteran families reporting they had debt, according to the Military Family Advisory Network. Here are some tips for veterans to deal with debt.

  • Seek out debt assistance programs for veterans. These can offer relief and help to military members and veterans burdened by debt.
  • Veterans who can afford to do so can make extra payments to get out of debt faster. This will pay down balances faster, save hundreds or even thousands of dollars in interest, and shave months or years off of the repayment period.
  • Debt consolidation can also be an option to manage debt, especially if you have high-interest debt (credit card balances, for example). Use a new credit account, like a personal loan or a new credit card with a 0% introductory APR, to pay off and replace existing debt. If debt can be consolidated to a lower rate, this can help lower interest to make monthly payments more affordable or help pay off debt faster.

In addition to using veteran benefits and managing debt, veterans can look for other steps to shore up their finances. Saving an emergency fund can be a wise next step, as well as ramping up retirement contributions and improving financial literacy.

Wherever veterans live, they can use this study to see how favorable their state is for their demographic. Short of moving, however, the best thing they can do for their money is to actively manage it and build financial security.

Methodology

Analysts used data from the U.S. Department of Veterans Affairs and U.S. Census Bureau’s 2017 American Community Survey, available on FactFinder and calculated from microdata hosted by IPUMS.

Metrics were divided into three categories, which were then scored independently as the average of the component scores, which were calculated as a point in relation between the maximum and minimum value among all states. The three category scores were then averaged for a final score. The highest possible score for each metric, category and final score is 100 and the lowest is zero.

The categories and component metrics are:

  • Veteran population
    • The percentage of the adult population who are veterans
    • The projected annual percentage change in the number of veterans
  • Veterans Affairs score
    • The number of inpatient, outpatient and VA centers per 100,000 VA enrollees
    • The average patient ratings of primary care at VA facilities
    • The average patient ratings of specialty care at VA facilities
  • Veteran economic score
    • Median income for veterans
    • Unemployment rate for veterans in the workforce
    • Median annual property taxes paid by veterans who own homes (range)

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.

Elyssa Kirkham
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Elyssa Kirkham is a writer at MagnifyMoney. You can email Elyssa here

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Balance Transfer, Best of, Pay Down My Debt

Best balance transfer credit cards: 0% APR, 21 months

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication. This site may be compensated through a credit card partnership.

If you’re carrying a balance on your credit card, you’re not alone. Fifty-nine percent of Americans carry a balance month-to-month, with the average balance $6,354 per cardholder, according to a study by CompareCards. Carrying a balance from one month to the next is never ideal, but it can happen to the best of us.

If your balance is incurring high interest charges, you should consider transferring your debt to a balance transfer card. These cards offer no or low interest and can save you a substantial amount of money. There’s often a 3%-5% balance transfer fee, but it can be worthwhile — just do the math to make sure by using this balance transfer calculator.

Most balance transfer cards require good or excellent credit, so you may not qualify depending on your credit score. It’s a good idea to check your credit score before you apply for a card, so you know which cards provide you with the best approval odds. LendingTree, our parent company, lets you view your credit score for free and provides insight into what affects your score and outlines steps you can take to improve it. If your score prevents you from qualifying for a balance transfer card, you can explore taking out a personal loan instead.

We’ve selected the best balance transfer cards from our database of over 3,000 credit cards, so you can find the card that best fits your needs — whether it’s a card with a long intro 0% APR period, no balance transfer fee, or a low promo APR for several years.

Longest balance transfer offers

When you’re looking to transfer a large balance, it may be in your best interest to choose a balance transfer card with a long intro period. Most balance transfer cards have intro periods of 12 or 15 months, but that may not be enough time to pay off your debt. Consider cards offering no interest for 18 or 21 months.

Here are some of the best cards:

Citi Simplicity® Card - No Late Fees Ever

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The information related to Citi Simplicity® Card - No Late Fees Ever has been collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.

Citi Simplicity® Card - No Late Fees Ever

Intro Purchase APR
0%* for 12 months on Purchases*
Intro BT APR
0%* for 21 months on Balance Transfers*
Regular Purchase APR
16.24% - 26.24%* (Variable)
Annual fee
$0*
Balance Transfer Fee
5% of each balance transfer; $5 minimum
Credit required
good-credit
Excellent/Good
The Citi Simplicity® Card - No Late Fees Ever offers the longest balance transfer period: intro 0%* for 21 months on balance transfers*. This provides you with nearly two years to pay off transferred balances without incurring any interest charges. In addition, this card comes with an intro 0%* for 12 months on purchases*, which is helpful if you plan to use this card for more than just a balance transfer. After the balance transfer and purchase intro periods end, there’s a 16.24% - 26.24%* (Variable) APR). Just know, this card has a higher balance transfer fee than most cards at 5% of each balance transfer; $5 minimum.

Discover it® Balance Transfer

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Rates & Fees

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Discover it® Balance Transfer

Regular APR
14.24% - 25.24% Variable
Intro Purchase APR
0% for 6 months
Intro BT APR
0% for 18 months
Annual fee
$0
Rewards Rate
5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com and more up to the quarterly maximum, each time you activate, 1% unlimited cash back on all other purchases - automatically.
Balance Transfer Fee
3%
Credit required
good-credit
Excellent/Good
The Discover it® Balance Transfer offers three months less than the Citi Simplicity® Card - No Late Fees Ever, with an intro 0% for 18 months on balance transfers (after, 14.24% - 25.24% Variable APR). However, this card has a lower 3% balance transfer fee that can save you more money if you’re able to pay of transferred balances during the intro period.

The Discover it® Balance Transfer stands out from other balance transfer cards by offering a rewards program: 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com and more up to the quarterly maximum, each time you activate, 1% unlimited cash back on all other purchases – automatically. While this is a great perk, don’t let this distract you from your primary goal — getting out of debt, not earning rewards, so it’s best not to rack up new charges on a balance transfer card.

Wells Fargo Platinum Visa Card

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

Wells Fargo Platinum Visa Card

Regular Purchase APR
17.74%-27.24% (Variable)
Intro Purchase APR
0% for 18 months
Intro BT APR
0% for 18 months
Annual fee
$0
Balance Transfer Fee
3% for 120 days, then 5%
Credit required
good-credit
Excellent/Good
The Wells Fargo Platinum Visa card also offers an intro 0% for 18 months on balance transfers, but this applies to new purchases as well. After the intro period ends, a 17.74%-27.24% (Variable) APR applies. The balance transfer fee is 3% for 120 days, then 5%. While this card has no rewards, you can receive cell phone protection up to $600 (subject to a $25 deductible) against covered damage or theft when your monthly cell phone bill is paid with your card.

No balance transfer fee cards

If you want to maximize savings with a balance transfer, you should consider cards that don’t charge a balance transfer fee. These cards can save you the typical 3%-5% fee most balance transfer cards charge. Just know, cards with no balance transfer fees often have shorter intro periods of 15 months or less. You can read our roundup for an extensive list of no balance transfer fee cards.

Here are some of the best cards:

The Amex EveryDay® Credit Card from American Express

The Amex EveryDay® Credit Card from American Express is a well-rounded card that offers an intro 0% for 15 months on balance transfers and purchases (after, 15.24%-26.24% Variable APR). In addition to the intro periods, you can benefit from a rewards program tailored to U.S. supermarket spenders where you earn 2x points at US supermarkets, on up to $6,000 per year in purchases (then 1x), 1x points on other purchases.

The intro offers, coupled with the rewards program make The Amex EveryDay® Credit Card from American Express the frontrunner among balance transfer cards. This card presents cardholders with the unique opportunity to transfer a balance and make a large purchase during the intro period without incurring interest, and earn rewards on new 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.

Chase Slate®

The Chase Slate® offers the same 0% intro apr on balance transfers for 15 months and 0% intro apr on purchases for 15 months as the previous two cards. After the intro period ends, there’s a 17.24% - 25.99% Variable APR. This is a no-frills card that won’t earn you rewards or noteworthy perks, but can help you get out of debt.

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

Low rate balance transfer cards

If you think it will take longer than 21 months to pay off your credit card debt, you might want to consider a low rate balance transfer card. Rather than pay a balance transfer fee and receive a promotional 0% APR, these cards offer a low interest rate for three years or more. The longest offer can give you a low rate that only goes up if the prime rate goes up. If you can’t get that offer, there is another good option offering a low rate for three years.

Variable Rate Credit Visa®Card from UNIFY Financial CU

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Variable Rate Credit Visa®Card from UNIFY Financial CU

Regular Purchase APR
7.24%-18.00% Variable
Intro Purchase APR
N/A
Intro BT APR
N/A
Balance Transfer Fee
$0
If you need a long time to pay off debt at a reasonable rate, and have great credit, it’s hard to beat this deal from Unify Financial Credit Union. The Variable Rate Credit Visa®Card from UNIFY Financial CU offers an ongoing 7.24%-18.00% Variable APR. Plus, there’s no balance transfer fee.

Note: Membership to Unify Financial Credit Union is required to open this card, but anyone can join through one of their affiliate partners, the Surfrider Foundation or Friends of Hobbs, at no additional charge.

Prime Rewards Credit Card from SunTrust Bank

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on SunTrust Bank’s secure website

Prime Rewards Credit Card from SunTrust Bank

Regular Purchase APR
13.49%–23.49% Variable
Intro BT APR
3 year introductory offer at Prime Rate (currently 5.50% variable APR) on balance transfers made in the first 60 days after account opening.
Annual fee
$0
Rewards Rate
Earn 1% Unlimited Cash Back on all qualifying purchases.
Balance Transfer Fee
None for all balances transferred within 60 days of account opening, then $10.00 or 3% of the amount of the transfer, whichever is greater
The Prime Rewards Credit Card from SunTrust Bank offers a 3 year introductory offer at Prime Rate (currently 5.50% variable APR) on balance transfers made in the first 60 days after account opening. After, 13.49%–23.49% Variable APR. There’s also an intro balance transfer fee: None for all balances transferred within 60 days of account opening, then $10.00 or 3% of the amount of the transfer, whichever is greater. Beware, the low variable APR doesn’t apply to new purchases, and new transactions will incur a 13.49%–23.49% Variable APR.

Balance transfer card for fair credit

Platinum Mastercard® from Aspire FCU

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on Aspire Federal Credit Union’s secure website

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Platinum Mastercard® from Aspire FCU

Regular Purchase APR
10.40% - 18.00% Variable
Intro Purchase APR
0% Intro APR on Purchases for 6 months
Intro BT APR
0% Intro APR on Balance Transfers for 6 months
Annual fee
$0
Balance Transfer Fee
$5 or 2% of the amount of each balance transfer, whichever is greater
Credit required
fair-credit

Average

If your have fair credit, you may qualify for the Platinum Mastercard® from Aspire FCU. On their site, Aspire states a “fair to good credit score [is] required.” This is good news for people with less than stellar credit. However, the balance transfer offer is significantly lower than cards for good or excellent credit — 0% Intro APR on Balance Transfers for 6 months (after, 10.40% - 18.00% Variable APR). Regardless, six months is better than nothing. And, with careful planning, you can pay off transferred balances during the intro period.

Note: This is a credit union card, so membership is required. Anyone can become a member of the Aspire Federal Credit Union by joining the American Consumer Council at no additional cost.

Learn more

Checklist before you transfer

Never use a credit card at an ATM

If you use your credit card at an ATM, it will be treated as a cash advance. Most credit cards charge an upfront cash advance fee, which is typically about 5%. There is usually a much higher “cash advance” interest rate, which is typically above 20%. And there is no grace period, so interest starts to accrue right away. A cash advance is expensive, so beware.

Always pay on time

If you do not make your payment on time, most credit cards will immediately hit you with a steep late fee. Once you are 30 days late, you will likely be reported to the credit bureau. Late payments can have a big, negative impact on your score. Once you are 60 days late, you can end up losing your low balance transfer rate and be charged a high penalty interest rate, which is usually close to 30%. Just automate your payments so you never have to worry about these fees.

Get the transfer done within 60 days

Most balance transfer offers are from the date you open your account, not the date you complete the transfer. It is in your interest to complete the balance transfer right away, so that you can benefit from the low interest rate as soon as possible. With most credit card companies, you will actually lose the promotional balance transfer offer if you do not complete the transfer within 60 or 90 days. Just get it done!

Don’t spend on the card

Your goal with a balance transfer should be to get out of debt. If you start spending on the credit card, there is a real risk that you will end up in more debt. Additionally, you could end up being charged interest on your purchase balances. If your credit card has a 0% balance transfer rate but does not have a 0% promotional rate on purchases, you would end up being charged interest on your purchases right away, until your entire balance (including the balance transfer) is paid in full. In other words, you lose the grace period on your purchases so long as you have a balance transfer in place.

Don’t try to transfer between two cards of the same bank

Credit card companies make balance transfer offers because they want to steal business from their competitors. So, it makes sense that the banks will not let you transfer balances between two credit cards offered by the same bank. If you have an airline credit card or a store credit card, just make sure you know which bank issues the card before you apply for a balance transfer.

Comparison tools

Savings calculator – which card is best?

If you’re still unsure about which cards offer you the best deal for your situation, try our calculator. You get to input the amount of debt you’re trying to get a lower rate on, your current rate, and the monthly payment you can afford. The calculator will show you which cards offer you the most savings on interest payments.

Balance transfer or a loan?

A balance transfer at 0% will get you the absolute lowest rate. But you might feel more comfortable with a single fixed monthly payment, and a single real date your loan will be paid off. A lot of new companies are offering great rates on loans you can pay off over 2, 3, 4, or 5 years. You can find the best personal loans here.

And you might find even though their rates aren’t 0%, you could afford the payment and get a plan that takes care of your debt for good at once.

Use our calculator to see how your payments and savings will compare.

Questions and Answers

It depends, some credit card companies may allow you to transfer debt from any credit card, regardless of who owns it. Though, they may require you to first add that person as an authorized user to transfer the debt. Just remember that once the debt is transferred, it becomes your legal liability. You can call the credit card company prior to applying for a card to check if you’re able to transfer debt from an account where you are not the primary account holder.

Yes, you can. Most banks will enable store card debt to be transferred. Just make sure the store card is not issued by the same bank as the balance transfer credit card.

As a general rule, if you can pay off your debt in six months or less, it usually doesn’t make sense to do a balance transfer.

Here is a simple test. (This is not 100% accurate mathematically, but it is an easy test). Divide your credit card interest rate by 12. (Imagine a credit card with a 12% interest rate. 12%/12 = 1%). In this example, you are paying about 1% interest per month. If the fee on your balance transfer is 3%, you will break even in month 3, and will be saving money thereafter. You can use that simplified math to get a good guide on whether or not you will be saving money.

And if you want the math done for you, use our tool to calculate how much each balance transfer will save you.

With all balance transfers recommended at MagnifyMoney, you would not be hit with a big, retroactive interest charge. You would be charged the purchase interest rate on the remaining balance on a go-forward basis. (Warning: not all balance transfers waive the interest. But all balance transfers recommended by MagnifyMoney do.)

Many companies offer very good deals in the first year to win new customers. These are often called “switching incentives.” For example, your mobile phone company could offer 50% off its normal rate for the first 12 months. Or your cable company could offer a big discount on the first year if you buy the bundle package. Credit card companies are no different. These companies want your debt, and are willing to give you a big discount in the first year to get you to transfer.

If you transfer your debt and use your card responsibly to pay off your balance before the intro period ends, then there is no trap associated with the 0% APR period. But, if you neglect making payments and end up with a balance post-intro period, you can easily fall into a trap of high debt — similar to the one you left when you transferred the balance. As a rule of thumb, use the intro 0% APR period to your advantage and pay off ALL your debt before it ends, otherwise you’ll start to accumulate high interest charges.

Balance transfers can be easily completed online or over the phone. After logging in to your account, you can navigate to your balance transfer and submit the request. If you rather speak to a representative, simply call the number on the back of your card. For both options, you will need to have the account number of the card with the debt and the amount you wish to transfer ready.

You will be charged a late fee by missing a payment and may put your introductory interest rate in jeopardy. Many issuers state in the terms and conditions that defaulting on your account may cause you to lose out on the promotional APR associated with the balance transfer offer. To avoid this, set up autopay for at least the minimum amount due.

No, you can’t. Balances can only be transferred between cards from different banks. That includes co-branded cards, so be sure to check which issuer your card is before applying for a balance transfer card — since you don’t want to find out after you’ve been approved that both cards are backed by the same issuer.

Many credit card issuers will allow you to transfer money to your checking account. Or, they will offer you checks that you can write to yourself or a third party. Check online, because many credit card issuers will let you transfer money directly to your bank account from your credit card. Otherwise, call your issuer and ask what deals they have available for “convenience checks.”

In most cases, you cannot. However, if you transfer a balance when you open a card, you may be able to. Some issuers state in their terms and conditions that balance transfers on new accounts will be processed at a slower rate compared with those of old accounts. You may be able to cancel your transfer during this time.

Yes, it is possible to transfer the same debt multiple times. Just remember, if there is a balance transfer fee, you could be charged that fee every time you transfer the debt. Also, don’t keep on transferring your debt without making payments because you won’t accomplish much.

You can call the bank and ask them to increase your credit limit. However, even if the bank does not increase your limit, you should still take advantage of the savings available with the limit you are given. Transferring a portion of your debt is more beneficial than transferring none.

Yes, you decide how much you want to transfer to each credit card. For example, if you have $3,000 in debt, you can transfer $2,000 to Card A and $1,000 to Card B.

No, balance transfers are excluded from earning any form of rewards whether it’s points, miles or cash back.

No, there is no penalty. You can pay off your debt whenever you want without a penalty. It’s key to pay off your balance as soon as possible and within the intro period to avoid carrying a balance post-intro period.

Mathematically, the best balance transfer credit cards are no fee, 0% intro APR offers. You literally pay nothing to transfer your balance and can save hundreds of dollars in interest had you left your balance on a high APR card. Check out our list of the best no-fee balance transfer cards here. However, those cards tend to have shorter intro periods of 15 months or less, so you may need more time to pay off your balance.

If you are running out of time on your intro APR and you still have a balance, don’t sweat it. At least two months before your existing intro period ends, start looking for a new balance transfer offer from a different issuer. Transfer any remaining balance to the card with the new 0% intro offer. This can provide you with the additional time needed to pay off your balance. Ideally, look for a card that has a 0% intro APR and also no balance transfer fee.

This post contains links to CompareCards, similar to MagnifyMoney, is also owned by our parent company, LendingTree.

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]

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