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What to do When You’re Struggling to Make Payments on Debt

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Updated – November 28, 2018

When it comes to making good on debt payments, the struggle is real. One in 4 U.S. adults are behind on their bills, and almost 1 in 10 have debts in collections, according to a 2018 survey from the National Foundation for Credit Counseling.We all know we’re supposed to pay our debts, but sometimes life happens. We run into an unexpected hiccup — a stint of unemployment, a medical emergency — and our budget falls apart.

A healthy emergency fund is by far your best protection, offering a safety net during tough financial times. Arielle Minicozzi, a Phoenix-based certified financial planner, tells MagnifyMoney that saving up three to six months worth of expenses is a good target. You won’t get there overnight, but earmarking part of every paycheck does add up over time, which will amount to a cash reserve you can draw on to cover debt payments when in a pinch.

If you’re learning this lesson after the fact, don’t sweat it. As for rebounding and getting back on the right track, you have more options than you might think. Here’s what to do if you’re struggling to keep up with your debt payments.

How to tackle these 5 forms of debt

Depending on the kind of debt you’re carrying, you have various ways of catching up or staying on time with payments.

Click a debt type below to learn more:

1. Mortgage

Your mortgage is a secured type of debt, which means that there’s an asset serving as collateral — in this case, it’s your home. If you fall seriously behind on your mortgage, your lender is within its rights to foreclose on your house. Fortunately, making one late payment isn’t enough to start proceedings, so you do have some wiggle room.

Generally speaking, most mortgages have a 15-day grace period from the due date where you can still make your payment. You could be hit with a late fee, which isn’t the end of the world if you’re stuck between a rock and a hard place. But things get more serious if you reach the 30-day mark, at which point your lender may report your late payment to the credit bureaus.

When you’re 30 days or more late on a mortgage payment, you put your credit score at risk. It could drop anywhere from 50 to 100 points. Things vary from state to state, but formal foreclosure proceedings typically begin after 120 days.

What to do if you’re struggling with payments

“I’d say your mortgage is one [debt] you really want to prioritize paying, so the important thing is to make sure you don’t wait until you’re delinquent,” Minicozzi said. “As soon as you see that you have a potential issue on your hands — you’ve made a late payment or think you’re about to make a late payment because you’re struggling to pay — you want to call your servicing department right away for your lender.”

Lead with honesty. Minicozzi said a surprising number of lenders are willing to work with borrowers. This may mean reducing or suspending your payments for a brief period or temporarily lowering your interest rate until you get back on your feet. She emphasized that you’ll have the most options if you reach out before you’re way behind on payments.

Programs that could help

The Consumer Financial Protection Bureau (CFPB) recommended connecting with a Department of Housing and Urban Development-approved housing counselor. They can provide free expert insights for avoiding foreclosure. Your mortgage servicer may also have mortgage assistance programs in place for preventing foreclosure so that you can resolve the issue without losing your home.

2. Car loan

Auto loans are another type of secured debt, which means your car is up for grabs if you default on your payments. But, unlike mortgages, Minicozzi said auto loans aren’t as heavily regulated. Translation: The window between missed payments and surrendering your car to repossession often closes fast.

So how many payments do you have to miss before this happens? Lenders in most states can swoop in and seize your car without warning if you’ve defaulted on your loan (i.e., missed a payment). Again, specific state laws vary, but the lender typically can’t breach the peace when repossessing your car. The CFPB said making threats, using physical force or removing your car from your closed garage without your permission all count as breaching the peace. That said, lenders in many states can use a device to deactivate your car’s ignition system.

What to do if you’re struggling with payments

If you have good credit, refinancing your auto loan could pull double duty — reducing your interest rate and bringing down your monthly payment to something that gels better with your budget. If that isn’t on the table, and you don’t see your financial situation changing anytime soon, a last-resort option is to return the car to the lender.

This doesn’t mean that your loan is forgiven, though. In most cases, they’ll sell the car and use the proceeds to pay themselves for costs associated with the sale before applying the remainder toward your loan balance. The only snag here is that it typically isn’t enough to cover everything, so any leftover balance will be on you.

Programs that could help

“Most [lenders] would rather work with you than go through the hassle of going after you,” Chris Jackson, a Los Angeles-based certified financial planner, told MagnifyMoney.

Check with your lender to see if it has any financial hardship assistance programs that could help. Even if it doesn’t have any formal programs in place, it may still be open to striking a deal with you, whether that be temporarily reducing or suspending your payments for a brief period.

3. Student loans

Student loans fall into two main categories: federal loans and private loans. The latter are doled out by private lenders, while federal loans are backed by the government, so they come with unique borrower protections. Grace periods, according to the Department of Education, come standard for federal loans, which gives new grads some time to breathe before they have to start making payments. But private loans are less clear-cut since every lender has its own rules and criteria.

You’re considered delinquent on your account the day after you’ve missed your first payment. If you haven’t made good on your federal loan payment after 90 days, your student loan servicer will report it to the credit bureaus, which can do a number on your credit score. Your payment history makes up 35% of your FICO score.

Your federal loans will default if no payment is received after 270 days — and a lot of repercussions could follow. For example, your wages could potentially be garnished or the total unpaid balance plus interest may suddenly be due immediately.

Private lenders may be more aggressive. They may report your missed payment to the credit bureaus immediately or mark your loan as in default after as little as three months. Besides the account being sent to collections — which dings your credit score and stays on your credit report for up to seven years — you could also be subject to a lawsuit.

What to do if you’re struggling with payments

The sooner you act, the better. This is where those federal loan protections come into play. If your loan payments are especially high compared to your income, you may be eligible for an income-driven repayment plan, which could significantly reduce your monthly payments. You might also be able to secure a deferment or forbearance, which temporarily stops or reduces your monthly payments for a period.

If you’ve got private loans, all hope isn’t lost. Refinancing your student loans could get you better terms or a lower interest rate — and significantly reduce your monthly payment.

Programs that could help

Jackson recommended looking to your employer to see if it offers any student loan repayment programs. Aetna, for example, matches employees’ U.S.-based loan payments up to $2,000 a year.

“These programs allow employers to make a regular contribution to the loan balance, typically $100 a month, while employees continue to make their regular payments,” Jackson said. “Unlike tuition reimbursement benefits, however, which are tax-free below a certain amount, the employer’s loan contributions are considered taxable income.”

What’s more, there are some federal loan forgiveness programs up for grabs, such as Public Service Loan Forgiveness. The Department of Education also recognizes certain situations, such as bankruptcy or permanent disability, where your loan balance can be discharged.

4. Consumer debt

Unsecured debts such as credit cards and personal loans fall into this camp. Credit card bills come with a minimum payment you have to make each month that tends to fluctuate as your balance increases or decreases. But personal loans have a fixed monthly payment that stays the same for the life of the loan.

Falling behind on your payments is no small thing. Remember: Your payment history accounts for over one-third of your credit score. That’s not to say that a single late payment is going to automatically tank your credit, but if you haven’t paid after 30 days, things start getting more serious. At this point, your credit score can go down anywhere from 60 to 110 points.

Why is your credit score so important? In short, it dictates your borrowing power. Whether you’re applying for a mortgage, an auto loan or a credit card, this magic number determines your interest rates (aka how much you’ll be charged to borrow). A low score could prevent you from being approved altogether. Regardless of what you’re financing, the best rates and terms go to those with good credit.

When you are making payments, the goal of the bank or credit card company is to keep you making those payments. They are very happy receiving the minimum due. By making the payments, you are demonstrating that you are capable and willing to pay. So, the banks are very keen that you keep doing it.

Having said that, you should still try to negotiate with them and see what they can offer. Just give your credit card company a call, and tell them that you are in financial difficulty and will no longer be able to make payments on time. Tell them that you won’t be able to make the payment next month, and you would like to see what forbearance options are available.

Most banks offer two types of forbearance programs:

    • You are having a temporary problem, so they look to reduce your payment for a temporary period of time. For example, you could pay interest only for a few months, and then have the payment increase once your temporary problem is over.
    • You have had a significant change in circumstance (e.g. death in the family and subsequent reduction in earning potential), and you need to have principal forgiven. Since you are reading this, you most likely are suffering from the second (more serious) problem. However, banks are much more likely to give you solutions to the first problem, especially if you are current on your debt.
  • When you are speaking to the bank, don’t accept a solution that only gives temporary relief. For example, if they offer interest-only payments for 3 months, reject that offer. You are looking for serious debt relief right now, not a temporary solution. Your chance of success is low.
  • But you should always give the bank a chance. And, some credit unions may be even more generous, working with you in person. I am still old-fashioned. Even though the banks probably won’t treat you like an individual, it is worth trying. See if you can negotiate a settlement that works. If it doesn’t work, then you may want to consider that you stop paying. Once you become delinquent, you will have more options with your bank. And, the more delinquent you become, the greater the chance that you can reach a settlement.

First Warning

Once you stop making payments, you will seriously hurt your credit score. In fact, once you start down this path, it will be a few years before you will be able to borrow again, and it will be 7 years before this mess completely disappears from your credit report. But just think about this: if you barely afford to make the minimum payment, it will be at least 30 years before the debt disappears. If you stop paying, it will be 7 years until the debt completely disappears from your credit report.

Second Warning 

Once you stop making payments, expect the collections calls, letters, texts and emails to start coming. And they will come with incredible intensity. You should expect to hear from every creditor every day for at least 6 months. They will then sell that debt to a collection agency, which will start to contact you daily as well.

Third AND BIGGEST Warning 

Your wages could be garnished. That means your creditor could sue you, and money could be taken out of your salary automatically to make payments on your behalf. There is a federal limit on how much can be garnished (and this only applies to the unsecured debt that we mentioned, not student loans, alimony and other debt).

At most, 25% of your disposable pay can be garnished. Disposable income is your gross salary minus most of your deductions, including federal income tax, social security, Medicare, state tax, health insurance premiums and any involuntary pension contribution. You can use this calculator to see exactly how much money you could have garnished from your wages.

What to do if you’re struggling with payments

Most things in life are up for negotiation. If you find yourself struggling to keep up, Minicozzi said it’s always best to contact the lender as soon as possible.

“You’re more likely to catch more flies with honey than vinegar,” she said. “Review your circumstances, reach out, work with them, and make a good-faith effort to make your payments. If they see that you’re trying to do that, they’re much more likely to work with you than if you hide and pretend like nothing bad is happening, which can lead to potential disaster for your credit.”

Beyond that, there are other ways to make your payments more manageable. Jackson recommended looking into balance transfer offers to consolidate credit card debt. This leverages 0% introductory promo periods during which you can hack away at your balances faster. Doing so typically comes with a 0% to 4% transfer fee, but that’s nothing if you’re up against double-digit interest rates.

Another alternative is to take out a lower-interest debt consolidation loan, then use that to pay off your credit card balances. The new loan will come with a fixed monthly payment, interest rate and repayment timeline, so you’ll know exactly what you’re getting from the start.

You can shop for debt consolidation loan offers using a free tool from LendingTree, MagnifyMoney’s parent company, and may help match you with up to five different lenders.

Programs that could help

Those who are in over their heads with consumer debt may find relief through nonprofit credit counseling. A credit counselor can help you make sense of your rights and work with creditors on your behalf. In some cases, a debt management plan may be the best option. Credit counselors can also help you create an effective budget to set you up for success going forward.

5. Medical bills

A typical employer-sponsored preferred provider organization, or PPO, health plan for an average American family of four will cost over $28,000 this year, according to the 2018 Milliman Medical Index. Some health care expenses, such as monthly premiums, can be expected. But an out-of-the-blue medical bill or emergency can be a shock to your finances, especially if you have a high-deductible health plan.

What’s more, some experts estimate that the majority of medical bills contain a minimum of one error that costs patients money. This includes everything from double billing to inaccurate insurance reimbursement.

Be that as it may, unpaid medical bills can wreak havoc on your credit score. Past-due medical debts are often sold to collection agencies, according to Experian, after which they’re reported to the credit bureaus like any other unpaid debt.

What to do if you’re struggling with payments

The silver lining, according to Jackson, is that medical providers have a reputation for working with patients to resolve billing issues.

“There is almost always room to negotiate your hospital bill, and in some cases you can get it reduced by as much as 90% or even forgiven completely,” he said. “Plus, collection agencies should be more impressed with an offer of a lump sum than with promises to make payments.”

In other words, brush off your negotiation skills and reach out to the provider. Jackson said that nine times out of 10, most are willing to get you on a monthly payment plan, often with 0% interest.

After receiving a medical bill, the CFPB suggests requesting an itemized statement and reviewing it carefully. If you find an error, send a written dispute to the medical provider. From there, you can negotiate to get your bill down even more.

“Don’t be afraid to push that number to see how low you can get the bill, especially if you’re able to pay in cash,” Jackson added.

Those who foresee a big-ticket medical expense on the horizon can also explore a personal loan that’s designed with medical bills in mind. This is an especially attractive option for borrowers with excellent credit as they’ll likely qualify for lower interest rates.

Programs that could help

If you’re on the hook for a medical bill you can’t afford, inquire about hospital-specific financial assistance programs. Sometimes referred to as “charity care,” these programs are designed to help low-income patients get the medical services they need, often by reducing or eliminating the financial responsibility.

The American Hospital Association reported that in 2016, community hospitals provided over $38.3 billion in uncompensated care. You can also see if you’re eligible for state-sponsored Medicaid coverage.

Putting it all together

No matter what kind of debt you have, being in over your head doesn’t have to be the new normal. Beyond the expert-backed steps mentioned above, getting yourself on track with a solid budget and prioritizing your emergency fund is the best way forward. This can help break the debt cycle and create a safety net to see you through whatever unexpected financial curveballs life throws your way.

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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The Most (And Least) Charitable Places in the U.S.

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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In order to find the most charitable places in America, researchers analyzed data for the 100 largest metro areas.

Giving to charity is a good thing, generally speaking. Not only may you support a cause you care about, but it could help lower your tax burden if you itemize deductions.

However, despite these benefits, our researchers found that certain places in the U.S. are more charitable than others. They compared 2017 itemized tax returns and analyzed data for the 100 largest metro areas to determine which places in the U.S. were the most charitable.

Key findings

  • Ogden, Utah, is the most charitable place in the U.S., followed by Birmingham, Alabama and Memphis.
  • In Birmingham, more than 89% of tax returns itemized deduction donations to charity.
  • Southern metro areas tended to be the most charitable. Seven of the top 10 most charitable places are in the South.
  • Religious centers tended to be more charitable than non-religious. The religious South and Utah tended to be the more charitable, while the less-religious Northeast tended to score the worst in our metrics. One obvious explanation for this is that church donations are tax-deductible for people who itemize.
  • Springfield, Massachusetts was the least charitable metro area in the study. People itemizing their tax returns there gave just 2% of their income.
  • Springfield’s neighbors were also stingy when it came to giving to charity. Worcester came in second-to-last. Here, tax returns with itemized deductions showed an average of 1.8% of income donated to charity.
  • The poorest who gave to charity tended to be the most generous, although the poorest tended to donate the least often, a fact that has not changed over time. According to 2016 data, Americans who earned at least $1 but less than $10,000 donated 14% of their income on average, though just 58.5% of them had charitable deductions.
  • The rich are more likely to have charitable deductions but tend to give a smaller portion of their income.

Rankings: The most charitable U.S. metro areas

This map shows how the 100 largest metro areas in the U.S. ranked according to the percentage of people who took charitable donation deductions on their tax returns in 2017. Areas represented by a blue dot are the most charitable, while those represented with orange dots are the least charitable. Purple and red dots represent areas that fall in the middle of our rankings.
The most charitable metro areas are located in states that are known for being heavily religious — Utah and the Bible Belt in the Southeast. The Northeast tends to be less religious and is blanketed with metro areas that have low donation rates.

Utah is a standout state when it comes to charitable giving, with two metro areas in the top 10. Ogden claims the top spot, and Salt Lake City comes in sixth place. Most of the rest of the top 10 is made up of metro areas in the Southeast: Birmingham, Ala. (second), Memphis, Tenn. (third), Atlanta (fourth), and Augusta, Ga. (fifth).
Springfield, Mass., is at the very bottom of our list rankings, with Worcester, Mass., following in the 99th slot. The rest of the bottom five includes: Scranton, Penn. (98th), Allentown, Pa. (96th), and Providence, R.I. (95th). Portland, Ore., represents the west coast as the 97th least charitable metro area on the list.

How charitable Americans are at different income levels

The following graphic shows how rates of charitable giving differ at various income levels. Each blue bar shows the percentage of tax returns on which itemized charitable donations were claimed at each income level. Each purple bar shows the average percentage of one’s income those charitable donations make up in each income bracket.

Overall, 81.9% of people itemized charitable deductions on their tax returns, and those donations make up an average of 3.4% of their income. Those who make more money tend to give to charity more often. Of people making $200,000 or more per year, 91% claim charitable deductions, while only 58.5% of those making less than $10,000 do so.

It’s not those who make the most who give the biggest portion of their income to charity, though. Those who make less than $10,000 a year give the biggest portion of their earnings (14%). Americans who make $100,000 to $199,000 give the smallest proportion of their income at just 2.7%.

Changes in charitable giving by year

In order to determine how charitable Americans are over time, we looked at charitable donations over a 12-year span. The following graphic reveals charitable giving as a percentage of income across various income levels.

Overall, the average percentage of income that’s claimed as a charitable donation has remained at fairly consistent levels between the years of 2004 (3.6%) and 2016 (3.5%). It dipped to a low of 3% in 2008, in the midst of the Great Recession.

Lower income brackets tend to have more ups and downs in charitable giving. In 2004, those making $5,000 or less donated an average 19.4% of their income to charity. But in 2007 and 2012, that average dropped to 14.6%.

Those in the highest income bracket on the graph ($10 million or more) made a significant jump in charitable donations in the last two years we analyzed, with their charitable donations going from 7% to 9.1% of their income.

5 tips if you’re donating to charity

While your intentions to donate to charity may be purely altruistic, if you’re making them, you may as well get credit for them if you can. Here are five things to keep in mind when making charitable contributions:

  • Research charities before donating. Sites such as Charity Navigator and GuideStar provide information about charity missions, as well as how they operate and spend money.
  • Ask for verification of an organization’s tax status before donating. In order for your donation to be tax deductible, it must be made to an organization that qualifies under IRS guidelines as tax-exempt.
  • Remember: You can only claim charitable donations if you itemize your taxes. You won’t qualify for a deduction if you take the standard deduction. If your deductible expenses including charitable donations are greater than the standard exemption ($24,400 for married couples and $12,200 for single taxpayers in 2019) then itemizing can save you money. (If you’re unsure whether itemizing your taxes makes sense, you may need to seek out a pro.)
  • Request and keep your receipts. While you don’t need to submit them with your tax return, if you ever get audited, you want to have them on hand.
  • Keep these two dates in mind. Remember that even though taxes must be filed by April 15 each year, charitable deductions must be made by the end of the calendar year (December 31) in order to be claimed on your taxes for that year.

Methodology

In order to find the most charitable places in the U.S., researchers analyzed data for the 100 largest metro areas. Specifically, we compared them across the following three categories:

  • Percent of itemized returns with charitable donations. Data comes from the IRS and is for the 2017 filing year.
  • Percent of adjusted gross income given to charity. This is the total deducted amount from charitable donations divided by total adjusted gross income for itemized returns. Data comes from the IRS and is for the 2017 filing year.
  • Average itemized charitable donation. This is the total amount donated to charity divided by the number of returns deducting charitable donations. Data comes from the IRS and is for the 2017 filing year.

We then created a score averaging the three percentile ranks each metro scored in each metric. Each metric was given the same weight. For the over-time data, we looked at the percent of adjusted gross income given to charity for each income bracket from 2004 to 2016.

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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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.

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. Terms Apply.

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
16.49% - 26.49%* (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 16.49% - 26.49%* (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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on Discover Bank’s secure website

Rates & Fees

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Discover it® Balance Transfer

Regular APR
13.74% - 24.74% 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% intro balance transfer fee, up to 5% fee on future balance transfers (see terms)*
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, 13.74% - 24.74% Variable APR). However, this card has a lower 3% intro balance transfer fee, up to 5% fee on future balance transfers (see terms)* 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 card

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

Wells Fargo Platinum card

Regular Purchase APR
17.24%-26.74% (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
good-credit
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 17.24%-26.74% (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, 14.99%-25.99% 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.

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 16.74% - 25.49% 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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on UNIFY Financial Credit Union’s secure website

Variable Rate Credit Visa®Card from UNIFY Financial CU

Regular Purchase APR
8.24%-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 8.24%-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
12.99%–22.99% 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, 12.99%–22.99% 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 12.99%–22.99% Variable APR.

Balance transfer card for fair credit

Aspire Platinum Mastercard® from Aspire FCU

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on Aspire Federal Credit Union’s secure website

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Aspire Platinum Mastercard® from Aspire FCU

Regular Purchase APR
9.90% - 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, 9.90% - 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.

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Alexandria White
Alexandria White |

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