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How to File for Chapter 11 Bankruptcy

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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Business owners struggling to keep their companies afloat don’t necessarily want to close down and liquidate assets or sell the business to the highest bidder. Instead, many may want to create a plan that helps them reduce debt and deal with the issues that caused the financial distress they are currently facing, ultimately saving their company. Any rates or fees listed below are accurate as of the date of publishing.

For these business owners, filing Chapter 11 bankruptcy may be the right solution. According to the American Bankruptcy Institute, there have been over 70,000 Chapter 11 filings across the U.S. since 2009; nearly 4,000 companies have filed in the first three quarters of 2018. In recent years, you may remember hearing about large companies like Sears and Toys “R” Us filing for Chapter 11. But what about you and your company? Could Chapter 11 be a viable option?

How Chapter 11 bankruptcy works

Like Chapter 13, Chapter 11 bankruptcy is a reorganization. Unlike Chapter 13, Chapter 11 is mainly for businesses and related to business debt.

“The filer can be a sole proprietor, S corporation, an LLC,” Robert W. Dremluk, a New York-based partner at the law firm Culhane Meadows, told MagnifyMoney. “Any format is okay, but the [filer] will primarily be addressing the business-related activities of the individual.”

While many business owners file a voluntary petition for Chapter 11, creditors can also file against a debtor, which turns it into an involuntary petition. Unlike Chapters 7 and 13 bankruptcy, there isn’t usually a trustee appointed at the start of a Chapter 11 filing. Instead, after filing, the business owner becomes the “debtor in possession” (DIP), allowing the debtor to retain control over the business assets during the term of the reorganization, which can take months or years to execute. This also allows them to make decisions about what to do with assets.

As an example, Dremluk mentioned a retailer who can choose to close underperforming stores and have a sale on the inventory but to continue operating successful locations.

Once a business owner has filed a petition for bankruptcy, an automatic stay is enacted, ensuring that collection activities, repossessions and foreclosures are suspended. In some cases, however — such as when the underlying property in question isn’t necessary for the reorganization or the owner has no equity in it — a creditor may request that the court lift the stay and allow them to foreclose.

While they are the debtor in possession, the business owner has 120 days to create and submit a plan for reorganization. The plan, which will outline how each class of claims (secured and unsecured) is to be handled, must then be filed with the court. A disclosure statement is then sent to creditors to allow them to evaluate the plan. Creditors who, according to the plan, will not get the full value of the debt they are owed or whose contracts are going to be modified under the reorganization, can vote against the plan.

When developing the plan, a business owner doesn’t go it alone. In addition to having their attorney to help, there is also a creditors committee comprised of representatives of the seven largest unsecured creditors. The committee helps to develop the plan and investigates the conduct of the business owner to help ensure proper management of assets.

Generally, a business owner’s personal assets are left out of a Chapter 11, but, as Dremluk noted, that’s not always the case. “Sometimes, an individual personally guarantees or pledges personal assets on behalf of the company, in a closely held company. An aggressive lender may call collateral, it depends,” he said. In addition, if the business is a sole proprietorship or a partnership, personal assets may be at risk.

When to consider filing Chapter 11

According to Dremluk, there are a number of events that can prompt a company to file for Chapter 11. In some cases, it could be due to the company facing financial difficulties or operational issues.

“Companies [sometimes] end up considering bankruptcy because they are in financial distress, and part of the reason for that may be that management is unable or unskilled in grappling with problems the company is facing,” said Dremluk. Whether the issue is that company management isn’t proficient at solving problems or that the company has overexpanded and isn’t able to correctly operate a business this large with their current structure, Dremluk said that bankruptcy gives them the opportunity to correct their course.

“Bankruptcy gives the business a chance for a pause and to reassess what they’re doing and how to do it better,“ he said.

What debt is erased in Chapter 11?

“Secured and unsecured debt whether public or private can be discharged,” said Dremluk. Unlike Chapter 7 bankruptcy, where unsecured creditors often walk away without receiving payment, Chapter 11 allows a business to set up a reorganization that pays creditors, although sometimes they receive less than the company owed them or the debt is paid over a longer period of time than the original contract specified. While secured creditors are prioritized in the reorganization, vendors who supply services and materials that are integral to the ongoing operation of the company (called “critical vendors”) may see their unsecured debt getting paid off during the bankruptcy.

What makes Chapter 11 so powerful is that it allows a company time to get their business on the right footing. With Chapter 11, said Dremlock, “[a] company can deal with asset/secured claims and sell assets over a period of time instead of in fire sale situation.”

How to file Chapter 11 bankruptcy

The first step a filer should take is reaching out to an attorney; as Dremluk noted, it is mandatory that a business owner filing for Chapter 11 “must be represented by counsel.” In addition, because each district court may have its own added requirements, an attorney can ensure you file everything necessary.

Business debtors who wish to file will be utilizing a multitude of forms in the 200-series, beginning with Official Form 201, “Voluntary Petition for Non-Individuals Filing for Bankruptcy.”

Next, business owners need to compile a list of the names and addresses of all their creditors. This list should be formatted however the court in your district requires.

Another official form that needs to be completed is Form 204, “Chapter 11 Cases: List of Creditors Who Have the 20 Largest Unsecured Claims Against Debtor and Are Not Insiders.”

“The list of creditors is submitted to the court for purposes of selecting a potential creditors committee,” said Dremluk. “You don’t want people on that committee who are conflicted because they are an officer or shareholder.”

Finally, for those business owners required to file periodic reports with the Securities and Exchange Commission (SEC), Form 201A, “Attachment to Voluntary Petition for Non-Individuals Filing for Bankruptcy Under Chapter 11,” should be completed.

Within 14 days of filing Form 201, the debtor will need to file the rest of the forms for their bankruptcy, which are:

  • Official Form 206, “Schedules of Assets and Liabilities”
  • Official Form 206A/B, “Schedule A/B: Real and Personal Property”
  • Official Form 206D, “Schedule D: Creditors Who Have Claims Secured by Property”
  • Official Form 206E/F, “Schedule E/F: Creditors Who Have Unsecured Claims”
  • Official Form 206G, “Schedule G: Executory Contracts and Unexpired Leases”
  • Official Form 206H, “Schedule H: Codebtors”
  • Official Form 206Sum, “Summary of Assets and Liabilities for Non-Individuals”
  • Official Form 202–Declaration, “Declaration Under Penalty of Perjury for Non-Individual Debtors”
  • Official Form 207, “Statement of Financial Affairs for Non-Individuals Filing for Bankruptcy”
  • Director’s Form 2030 (unless your court requests otherwise), “ Disclosure of Compensation to Debtor’s Attorney”

If the business owner declaring Chapter 11 meets the criteria to be considered a small business debtor, they must also include a balance sheet, statement of operations, cash-flow statement and federal income tax return. If the small business owner doesn’t have these documents, they can submit a statement under penalty of perjury that they have not prepared the documents or filed a federal tax return.

To determine whether a filer is a small business debtor, the criteria they must meet involves two elements. First, it must be ensured that the debts are no more than $2,566,050, and the business cannot be focused primarily on owning or operating real property. Second, a creditors’ committee has either not been appointed to the case, or has not properly provided necessary oversight, as determined by the court.

When filing, business owners can expect to be charged a $1,167 filing fee and $550 as a miscellaneous administrative fee. On top of that, a debtor must pay attorney fees, which can get weighty.

“Chapter 11 has become too expensive for most companies to file, and lenders have also reached the point in their analysis where they don’t want to support a company for a long time. They’d rather have a company liquidate and take their losses,” said Dremluk, who added that fee arrangements and advanced budgets for attorney fees might help a filing company’s chances of success.

Within 120 days of petitioning the court for Chapter 11 bankruptcy, the company needs to submit its plan for reorganization. The plan will generally include provisions for how the reorganization will be implemented, including how business will continue, how funding will occur, how each class of creditor will be paid, the interest paid to them and so on.

One important aspect of the reorganization plan is that it needs to be in the best interest of creditors in order to get approved. “The plan needs to be in the best interest of creditors, so treatment of creditors under the plan must be better than they’d get in a liquidation,” said Dremluk.

Dremluk added that, ideally, through the reorganization “the company will be able to discharge debt, resolve claims and emerge with a cleaner balance sheet and a lot of its other issues behind it.” Small businesses can submit this plan on Form 425A, “Plan of Reorganization for Small Business Under Chapter 11,” along with the disclosure 425B, “Disclosure Statement for Small Business Under Chapter 11.”

Initial Filing

Official Form 201

Voluntary Petition for Non-Individuals Filing for Bankruptcy

Compile a list of the names and addresses of all their creditors.

This list should be formatted however the court in your district requires

Official Form 204

Chapter 11 Cases: List of Creditors Who Have the 20 Largest Unsecured Claims Against Debtor and Are Not Insiders

Official Form 201A

Attachment to Voluntary Petition for Non-Individuals Filing for Bankruptcy Under Chapter 11 (for those business owners who are required to file periodic reports with the SEC)

Within 14 Days of Filing Form 201

Official Form 206

Schedules of Assets and Liabilities

Official Form 206A/B

Schedule A/B: Real and Personal Property

Official Form 206D

Schedule D: Creditors Who Have Claims Secured by Property

Official Form 206E/F

Schedule E/F: Creditors Who Have Unsecured Claims

Official Form 206G

Schedule G: Executory Contracts and Unexpired Leases

Official Form 206H

Schedule H: Codebtors

Official Form 206Sum

Summary of Assets and Liabilities for Non-Individuals

Official Form 202–Declaration Official

Declaration Under Penalty of Perjury for Non-Individual Debtors

Form 207

Statement of Financial Affairs for Non-Individuals Filing for Bankruptcy

Director’s Form 2030 (unless your court requests otherwise)

Disclosure of Compensation to Debtor’s Attorney

Small Business Debtors
  • Balance sheet

  • Statement of operations

  • Cash-flow statement

  • Federal income tax return

If the small business owner doesn’t have these documents, they can submit a statement under penalty of perjury that they have not prepared the documents, nor filed a federal tax return

425A (within 120 days of filing form 201)

Plan of Reorganization for Small Business Under Chapter 11

425B (within 120 days of filing form 201)

Disclosure Statement for Small Business Under Chapter 11

Within 120 Days of Filing Form 201

Reorganization Plan

Plan of reorganization (no official forms unless it’s a small business debtor)

After filing Chapter 11: What happens next?

One of the initial benefits a business owner will experience after voluntarily filing for Chapter 11 is that an automatic stay is placed on all collection, foreclosure and repossession activities. But this is no time to relax and enjoy that removed pressure — instead, it’s time to create a viable plan for a successful reorganization.

Creating this plan is the most important part of the process, according to Dremluk, because it gives the company a target to reach for. “Without a target or exit strategy, I’ve seen companies file Chapter 11 and then flounder because they are directionless,” he said.

Dremluk said that companies creating a reorganization plan need to explore all the what-ifs, including the possibility of selling or resolving outstanding litigation. If these options are part of the plan for reorganization and they fall through, Dremluk said that the reorganization plan may no longer be viable and this could mean the case is converted to a Chapter 7 and an appointed trustee may operate the business or liquidate assets and close the case, potentially leaving the business owner without the option of emerging with their business intact.

Ideally, the goal is to emerge from a Chapter 11 successfully — of course, success can mean different things to different companies. Dremluk noted that generally, the objective is to have a company able to reorganize its business and emerge from bankruptcy with its problems behind it.

But in some cases, it may be about reducing debt so the business can be sold. According to Dremluk, in those situations, “[the] company would file bankruptcy to clean up problems and become attractive to another buyer. Soon after filing it would put itself up for sale, more often than not have a stalking-horse bidder — a buyer who is prepared to buy.” When there is a stalking-horse bidder (one who is bidding on a bankrupt company’s assets), the offer is still presented to the court and subject to higher and better offers. In the end, the successful bidder would own the company and its assets and the debtor will be out of the picture.

Is it time to file for Chapter 11?

When a business is in financial trouble, it may not immediately be time to file for Chapter 11, but it could be time to contact an attorney and start reviewing options. “As soon as signs of financial distress appear, a company should consider its options. Bankruptcy may be one,” said Dremluk.

For some business owners, however, out-of-court workouts — where a debtor works out a deal with a creditor without involving the court, filing bankruptcy or selling the company — may be better alternatives. It depends on whether the business owner wants to keep going, how amenable their creditors are to a workout and how much money they might lose selling their company as-is, with all its current difficulties.

Dremluk noted that one of the biggest mistakes he sees business owners make is waiting too long to reach out to an attorney: “Waiting until the last minute to reach out [makes successful emergence] much more difficult. If you’re an owner of a company and you’re starting to see problems, reach out sooner rather than later.”

FAQ

If the individual owner of a closely-held company made a personal pledge on a debt, that could impact their personal assets during the Chapter 11. Owners of sole proprietorships and partnerships may also have some personal asset exposure.

One of the most important things any business owner can do is get all their financial documents together. As Dremluk noted: “When you plan to file, gather key documents like leases, contact financial advisors to prepare income statements, list creditors and think about key suppliers and relationships and how they will be handled going forward.”

Time is of the essence, and the more time you give yourself, the better your chances are for recovery — so it’s best to reach out to an attorney as soon as your company starts having financial problems. Bankruptcy might not be the best solution at that time, but you can also discuss alternatives with counsel.

One of the most important factors, according to Dremluk, is the attorney’s level of experience. “Look for a professional that has experience with cases as opposed to someone in another practice area that occasionally does bankruptcy,” he said.

Dremluk also said to look for an attorney willing to make arrangements, and that business owners should be careful when comparing rates because an attorney with a below-market rate who charges for a high amount of hours can cost more than an attorney charging an average rate but who charges for a smaller number of hours.

Conclusion

The word bankruptcy conjures a lot of different feelings for people and very often those feelings are negative. But when it comes to a business filing Chapter 11, it’s hard not to see the positive potential in allowing that company the time and space to reorganize and find effective ways to deal with the problems that helped push it into financial distress.

Still, bankruptcy isn’t the right choice for every business owner, which is why it’s important to have an experienced attorney working on your case.

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Balance Transfer, Best of, Pay Down My Debt

Best Balance Transfer Credit Cards: Intro 0% APRs up to 21 Months

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.

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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 independently 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
14.74% - 24.74% (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 14.74% - 24.74% (Variable) APR). Just know, this card has a higher balance transfer fee than most cards at 5% of each balance transfer; $5 minimum.

The Discover it® Balance Transfer stands out from other balance transfer cards by offering a rewards program: 5% cash back on everyday purchases at
different places each quarter like grocery stores, restaurants, gas stations, select rideshares and online shopping, up to the quarterly maximum when you activate. While this is a great benefit, 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 card

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

Wells Fargo Platinum card

Regular Purchase APR
15.49%-24.99% (Variable)
Intro Purchase APR
0% for 18 months
Intro BT APR
0% for 18 months on qualifying balance transfers
Annual fee
$0
Balance Transfer Fee
3% for 120 days, then 5%
Credit required
excellent-credit

Excellent/Good

Excellent/Good
The Wells Fargo Platinum card also offers an intro 0% for 18 months on qualifying balance transfers, but this applies to new purchases as well. After the intro period ends, a 15.49%-24.99% (Variable) APR for purchases and balance transfers 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, 12.99% - 23.99% 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.

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 16.74% - 25.49% Variable APR. This is a no-frills card that won’t earn you rewards or noteworthy benefits, but can help you get out of debt.

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

Variable Rate Credit Visa®Card from UNIFY Financial CU

Regular Purchase APR
8.99%-17.49% 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 8.99%-17.49% 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
12.74%–22.74% Variable
Intro BT APR
3 year introductory offer at Prime Rate (currently 4.75% 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 4.75% variable APR) on balance transfers made in the first 60 days after account opening. After, 12.74%–22.74% 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 12.74%–22.74% Variable APR.

Balance transfer card for fair credit

Aspire Platinum Mastercard® from Aspire FCU

Regular Purchase APR
8.15% - 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 Aspire 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, 8.15% - 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 listed on our site 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.

The information related to The Amex EveryDay® Credit Card from American Express and Chase Slate® has been independently collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication. Terms apply to American Express credit card offers. See americanexpress.com for more information.

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.

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Balance Transfer, Best of, Pay Down My Debt

Best 0% APR Credit Card Offers – May 2020

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.

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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, 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 a long 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 12.99% - 23.99% 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.

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2. BankAmericard® credit card0% Introductory APR on purchases for 15 billing cycles, $0 Introductory Balance Transfer Fee

Cardholders can benefit from an 0% Introductory APR on purchases for 15 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 $0 Introductory Fee for transactions made within 60 days of opening your account. After that, your fee will be:Either $10 or 3% of the amount of each transaction, whichever is greater. Once the intro period ends, there is a 14.49% - 24.49% Variable APR. You can benefit from a $0 annual fee and access to your free FICO® Score.

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.

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 15.49%-24.99% (Variable) APR.

Wells Fargo Platinum card

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

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
15.49%-24.99% (Variable)
Annual fee
$0
Credit required
excellent-credit

Excellent/Good

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.’

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
The Platinum Card from Navy Federal Credit Union offers a 0% introductory APR for 12 months on balance transfers (after a 5.99% 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®
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

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
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
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

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 9.99% - 19.94% 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

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 6.75% 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
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
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
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
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
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.

The information related to The Amex EveryDay® Credit Card from American Express, BankAmericard® credit card and Chase Slate® has been independently collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication. Terms apply to American Express credit card offers. See americanexpress.com for more information.

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.

MagnifyMoney