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Best No-Fee Balance Transfer Credit Cards

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Balance transfer credit cards can be a valuable tool for families who hope to pay down debt. True to their name, these cards typically let consumers pay zero percent APR on balances they transfer over from another credit card with a much higher APR. Some even extend a lower interest rate or interest-free period to purchases made during the introductory offer.

The benefits of balance transfer cards are obvious if you’ve ever been in debt. With zero money going toward paying interest each month, it’s considerably easier to pay off debt at a much faster pace. And with the average credit card interest rate well over 17 percent right now, the savings can be astronomical.

Keep in mind, however, that a handful of balance transfer credit cards don’t let you avoid interest payments. Instead, they offer no-fee balance transfers with a typical variable APR. While these cards can be less than ideal, they can still help you save money on interest if the rate you’re being offered is lower than the rate you’re paying now, and saving on a 3 to 5 percent transfer fee helps, too. (See also: How to do a balance transfer in 5 easy steps)

What to look for in a balance transfer card

As you compare balance transfer credit cards on our list and elsewhere, make sure to check for the following features and benefits:

  • Length of interest-free introductory offer: Balance transfer cards usually offer zero percent APR for anywhere from six to 21 months. Make sure to compare offers to find one that is long enough for your debt repayment needs. The more debt you have, the more time you might need. 
  • Ongoing APR: Even if you qualify for a card with an interest-free introductory period, make sure to compare interest rates and how they stack up, since your rate will eventually reset once your zero percent APR offer is over. 
  • Balance transfer fee: Many balance transfer cards charge a balance transfer fee that is typically equal to 3 or 5 percent of your balance. Paying this fee may be well worth it in terms of interest savings, but you should try to avoid it if you can. 
  • Time limits: Some zero percent APR credit cards only extend zero interest offers to balances transferred within a short amount of time, usually 60 days. Make sure to check for these limits before you apply. 
  • Other limitations: Many cards in this category let you avoid interest on balance transfers and purchases, but not all do. Make sure you know your personal preference before you pick a card and apply.
  • Additional fees: Balance transfer credit cards rarely charge an annual fee, but you should still check. Also look up additional fees you may need to pay, such as late fees and over-the-limit fees. 

Best balance transfer cards with no annual fee

  • Amex EveryDay® Credit Card — Best for rewards
  • Chase Slate® — Best for balance transfers and purchases
  • SunTrust Prime Rewards Credit Card — Best for low interest rate
  • Platinum Credit Card from Capital One® — Best for bad credit

Amex EveryDay® Credit Card — Best for rewards

The Amex EveryDay® Credit Card starts you off with zero percent APR on purchases and balance transfers for 15 months, followed by a variable APR of 14.49 to 25.49 percent. You’ll also pay no balance transfer fee on balance transfer requests made within 60 days of account opening.

This card doesn’t charge an annual fee, and you’ll even earn rewards on purchases. Currently, you’ll earn 10,000 Membership Rewards points when you spend $1,000 within three months of account opening. You’ll also earn 2x points on up to $6,000 per year spent at U.S. supermarkets each year (then 1x) and 1x points on all other purchases. To top things off, you’ll earn 20 percent extra points when you use your card for at least 20 transactions per billing period.

Pros: No balance transfer fee if you transfer balance within 60 days, generous introductory zero percent APR period (14.49 to 25.49 percent variable thereafter), and ability to earn rewards

Cons: Only balances transferred within the first 60 days qualify for introductory APR period

The information about the Amex EveryDay Credit Card from American Express has been collected independently by Bankrate.com. The card details have not been reviewed or approved by the card issuer.

Chase Slate® — Best for balance transfers and purchases

The Chase Slate® is another balance transfer card that can help you save on interest without an annual fee. This card gives you 15 months with zero percent APR on purchases and balance transfers, followed by a variable APR of 16.49 to 25.24 percent. Note that balance transfers must be initiated within 60 days of account opening to qualify.

There’s no annual fee, nor is there a penalty fee if you pay your bill late. You’ll also get a free credit score on your monthly statement each month.

Pros: No balance transfer fee on balances transferred within the first 60 days

Cons: No rewards

The information about the Chase Slate credit card has been collected independently by Bankrate.com. The card details have not been reviewed or approved by the card issuer.

SunTrust Prime Rewards Credit Card — Best for low interest rate

The SunTrust Prime Rewards Credit Card is set up differently than the other cards on this list since there is no introductory zero percent APR period. Instead, this card gives you a full three years at the Prime Rate for balances transferred within the first 60 days of account opening. The current Prime Rate is 4.75 percent, and you could qualify for this rate for a full 36 months (12.99 to 22.99 percent variable APR thereafter) .

This card doesn’t have an annual fee or foreign transaction fees, and you’ll earn a $100 statement credit when you spend $500 on your card within three months. You’ll also earn 1 percent in rewards for each dollar you spend on your card.

Pros: Earn rewards, plus enjoy a low APR for three full years when you transfer balances within 60 days

Cons: There is no introductory interest-free period

Capital One® Platinum Credit Card  — Best for limited credit

The Capital One Platinum Credit Card isn’t the best credit card out there today, but it can help you get out of a bind if you’re carrying debt at an exorbitantly high interest rate. This card lets you transfer balances over at the variable APR, which is currently 26.99 percent. There is no time limit on how long you can repay your balances at this rate provided you’re paying the minimum monthly payment each month.

The Platinum Credit Card from Capital One doesn’t charge an annual fee, and you may be able to qualify with fair or limited credit. And even if your credit line is low at first, Capital One states that you may be able to qualify for a higher credit limit after five consecutive months of on-time payments.

Pros: No balance transfer fees, qualify with fair credit

Cons: High ongoing APR

How to calculate a balance transfer fee

While the credit cards we’ve profiled above don’t charge a balance transfer fee, many cards in this category do. Most balance transfer fees work out to 3 or 5 percent of balances you transfer over, although individual offers vary.

Keep in mind that when you transfer balances to a balance transfer card, this fee is charged to your balance upfront. If you were to transfer $10,000 in high interest credit card debt to a balance transfer card, for example, your fee could work out to 3 percent of your balance ($300) or 5 percent of your balance ($500) upfront depending on the credit card you sign up for.

Is paying a balance transfer fee worth it?

You may be wondering why anyone would pay a balance transfer fee when a handful of cards don’t charge this fee at all. The reality is, paying a balance transfer fee is often worth it if you’re able to save money on interest over a longer timeline.

Imagine that you have $9,000 in credit card debt at 19 percent APR. You’re considering the Chase Slate®, which gives you 15 months at zero percent APR on purchases and balance transfers made within 60 days of account opening (16.49 to 25.24 percent variable thereafter). You also won’t have any balance transfer fees for transfers during those 60 days. At that rate, you could avoid interest for a full 15 months with a minimum monthly payment of 2 percent of your balance, or $180. By the time 15 months were up, you would owe just $6,300 provided you made the same payment each month.

After 15 months were up, your interest rate would reset to the higher variable rate between 16.49 and 25.24 percent. For the sake of this example, let’s say your new rate is 19 percent. During the six months after your interest rate reset to 19 percent, if you made the same monthly payment of $180 you would pay $1,080 of your balance (more than half of that would go to interest). This means that, by the time 21 months total are up, you would still owe about $5,800 on your debt.

Now let’s imagine you opt for a card that offers a longer zero percent APR period in exchange for a balance transfer fee. With the Citi Simplicity® Card, you would get 21 months at zero percent APR on balance transfers, followed by a variable APR of 16.24 to 26.24 percent. But this card comes with a 5 percent balance transfer fee (minimum $5) on balances transferred in the first four months.

If you transferred your balance over to this card, you would be charged a 5 percent balance transfer fee of $450 upfront, bringing your initial balance up to $9,450. If you paid $180 per month for 21 months at zero percent APR, however, you would pay down $3,780 in debt during your card’s introductory offer. This means you would end the offer with $5,670 in remaining credit card debt by the time your interest rate is ready to reset. That’s $130 less than you would owe with the Chase Slate® after 21 months, even though you paid a balance transfer fee.

In simple terms, it can make sense to pay a balance transfer fee if you have a lot of debt at a high APR and you need as much time as possible to pay it off without interest. Make sure to run the numbers for your situation and use a credit card balance transfer calculator to determine which card works best for your needs.

Frequently asked questions

What is a balance transfer fee?

A balance transfer fee is a fee charged upfront by credit card issuers in order to be able to transfer balances over from another credit card or multiple cards.

What is the average balance transfer fee?

Most balance transfer cards with this fee charge either 3 percent or 5 percent of your balance upfront. Note, however, that not all credit cards charge a balance transfer fee.

When are balance transfer fees applied?

Balance transfer fees are charged upfront as soon as your balances are successfully transferred over to your new credit card account.

What is an introductory offer?

Some balance transfer credit cards come with an introductory offer that only lasts a limited time. So you may get a zero percent APR for a period, typically 15 to 21 months, and then the APR will revert to the card’s variable APR.

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Bad Credit

The case of the ugly-credit customer

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Thea Dudley

Dear Thea,

I recently had a customer apply for credit, and their commercial credit report was UGLY. They owe everyone, and they’re past due 90+ days. They have a few big orders pending with us and I feel they have been shut off everywhere else, which is why they are pushing so hard to get our orders shipped. I called the president of the company and told him we were opening his account COD so the orders pending would need to be paid prior to shipping them out. He blew up. He said he didn’t care about the information on the DNB report and it did not relate to them. Then he screamed at me, asking if we were going to send the materials. I am not interested in acquiring another slow paying account, so I need your thoughts.

Signed, Miffed in Michigan

Dear Miffed,

Control freaks, abusers of credit, and manipulators of people don’t ever question themselves. They never ask themselves if the problem is actually them, and they always say the problem is someone else. Such is the life of the slow-paying/no-paying account.

Yes, Mr. Crappy Credit Report, it is completely everyone else’s fault that your credit payment history looks like a piece of Swiss cheese: full of holes and slightly smelly. In fact, the Secret Society of Credit Managers got together last week and selected your company as THE ONE we were going to target for the month to make your professional life a nightmare. It has nothing to do with your inability to pay your invoices in a timely fashion. You, as always, are an innocent my dear customer.

Let’s be real here: customers with negative or poor credit history ALWAYS know they have bad credit, but they always posture like it is brand new information, heard for the very first time. What? My credit is bad? No, who is reporting me that way? I want names, numbers, I dispute it. This is total BS! The list of objections goes on and on. One thing they do know, it is wrong, and you need to give them credit RIGHT NOW or they will take their business elsewhere (oh, the horror.)

Blowhards and bullies shout over the top of you and push their agenda because that’s what worked for them in the past. Their theory is “if you say it loud enough and angry enough with enough threats and forcefulness, it becomes true and others back down.”

Well, I like to throw caution to the wind and pet that kitty backwards. If you are going to come at me bro, don’t come empty-handed. You’re not the first guy to lose his stuffing at me. So, your credit report is junk. Ok, no problem. I will email you a copy and you can address it directly with the commercial credit bureau I pulled it from. Once you two have kissed and made up, I will pull a new one and if it is good, then welcome to the family!

In absence of that, let’s take a look at the trade references you listed on your credit application. I will personally call each and every one of them. Once I have made contact and have the information back, we can reevaluate. Just so we are on the same page, trade references are who you currently purchase like materials from. I do not want anyone you hire (so no sub-contractors, no contractors, no homeowners), no big box, no gas and sip, no personal testimonials.

How about some financials? I will take those. Show me what you have under the hood. Since this is a family publication, I cannot print what some of the reactions to those requests have been but most of you have pretty good imaginations and can fill in those blanks.

If someone truly believes their credit report is inaccurate, they have a normal conversation about it, in a normal tone. In this case the old adage, “the louder they are, the harder they fall” applies, so take heed.

With more than 30 years of credit management experience in the LBM industry, Thea Dudley consults with companies on a wide range of credit and financial management issues. Contact Thea at theadudley@charter.net.

 

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Bad Credit

Credit mistakes to avoid – It’s Your Money

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Small credit mistakes, like paying off your credit card a few days late, aren’t a big deal.

You pay a small penalty or a bit of interest and carry on as before. A slip up like that won’t come back to haunt you the next time you apply for a mortgage.

Other mistakes though can have a significant impact, even if they seem relatively minor at the time. They can stay on your credit record for years and potentially cause you to not qualify for a mortgage or loan or have to pay a higher interest rate.

Here’s a list of five credit mistakes that you definitely want to avoid:

Ignoring your financial details.

Not being aware of what interest rates you are paying or when a temporary or “teaser” rate ends can be very costly. Carrying debt on certain accounts harms your credit score far more (credit cards) than others (lines of credit).

You need to have a clear picture of all debts that you owe, how much they are costing you and review regularly to make improvements if necessary. 

Draining retirement funds to avoid bankruptcy.

While nobody wants to claim bankruptcy, sometimes it’s the right choice. RRSPs are generally exempt from bankruptcy proceedings (except for amounts deposited in the last 12 months in some provinces) and can be left there to help you rebuild on the other side of the bankruptcy proceedings.  

Not checking your credit.

You can check your credit report easily and for free in Canada through Equifax and TransUnion. Checking regularly (at least once per year if not twice) will allow you to become aware of any credit issues or fraud sooner so that they can be dealt with.

Having something unexpected appear on a credit report is common for Canadians and it’s up to you to watch for them.

Co-Signing a loan.

While this might make sense on a rare occasion, it should be avoided most of the time and only be considered with extreme caution.

I realize that it can be hard for young people to buy their first home these days but if they can’t qualify on their own, they likely shouldn’t be going ahead. Not only will your co-signing reduce your own borrowing capacity, if the loan isn’t repaid it can be disastrous to your own finances.  

Not carrying any credit at all.

With all the pitfalls of having access to credit, it is still a necessary evil for most people. If you elect to go without a credit card or any other credit vehicle, you won’t build up a credit score which means you won’t be able to qualify for a loan when you need one.

And don’t cancel your first credit card either. Longevity in your credit history is equally important! 

Having bad credit isn’t permanent and your score can be improved over time. But like many things in life, doing so takes a little bit of time and effort. But it’s not that hard.

Just put a semi-annual reminder in your calendar to sit down and review your credit and request a report.

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UAE businesses do have options other than banks

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Alternative financing is trying to catch wider attention… and this time the providers stand a good chance of doing so.
Image Credit: Ador T. Bustamante/Gulf News

Ask most people where they would go for a loan, and the answer is usually their bank. But what about when the banks can’t – or won’t – lend?

The commercial disruption and consequent financial ramifications, first of the financial crisis and now more dramatically COVID-19, have challenged the banks’ primacy in the lending arena. As a direct result of the financial crisis in 2008, regulators sought to build up bank liquidity and limit leverage.

Basel III was introduced which required banks to maintain appropriate leverage ratios, sufficient levels of reserve capital and introduce countercyclical measures. These requirements are assessed on an annual basis and revised to minimise the risk of system-wide shocks and prevent future economic collapses.

What did this mean for borrowers? Loans were more difficult to secure, requirements on collateral became stricter and other terms and conditions became more restrictive.

Hit from all sides

In 2020, Basel III ratios for banks were revised upwards again (meaning more capital was required against risk-weighted assets), COVID-19 was announced a pandemic by the WHO and global financial markets crashed. Consequently, banks have been driven into preservation mode as they wrestle with lower profits due to the introduction of interest rate cuts and higher cost of risk with a deterioration in asset quality.

In addition, most commercial banks across the Gulf have rationalized their balance-sheets to focus on assets deemed safer based on the sector, business model and the maturity stage. As such, there has been an increase in lending to government/government-related entities and large-cap corporates, thus reinforcing the challenge of accessing finance from banks for many small, medium and mid-cap businesses.

Developers left with little

The real estate sector is a prime example of where we are seeing a significant liquidity issue, as banks shy away from financing any except government-backed assets. Developers are unable to unlock funds as usual from their existing projects to recycle into new ones.

The bond way

The second port of call is usually debt capital markets, i.e. issuance of bonds or sukuks which can be listed and/or traded over the counter. There are many advantages for companies to raise a bond, including more flexible terms and non-amortising structures. That said, it is a long process, with an operating history of three years preferred. Ratings are required and financial information about the company must be disclosed publicly.

Specialist advisors and investment banks assist companies in issuing bonds, but it is a long process and is subject to investor demand at the time of issuance.

Alternate ways

So where do businesses turn now? Step forward alternative finance. Simply put, it enables businesses to access quick, efficient, and flexible private debt from a source outside the traditional banking and capital market structures.

What is stopping businesses from taking advantage of such attractions? Misperceptions remain, with many business owners mistakenly viewing it as more expensive. And many view it as riskier and only for ‘bad credit’.

In fact, alternative finance providers are typically well-established financial institutions with the ability to quickly assess an opportunity, consider individual requirements of borrowers, and provide a bespoke solution that gives borrowers the flexibility they need while still protecting the interests of the lender.

These advantages enable businesses to access capital often far more quickly than via traditional methods and without some of the restrictive requirements, including tailored covenants and non-amortizing structures.

A deal which Shuaa completed in Dubai’s hospitality sector is a case in point. With a project already 85 per cent complete, the developer needed further funding – which the senior lender was unwilling to provide.

Getting a project to ready status

Due to leverage covenants, the developer was unable to raise debt from other sources, and because the asset was under construction the developer was unable to raise equity at an acceptable valuation. Shuaa was able to fulfil the complex requirements of the transaction through a preferred equity instrument, with a minimum return payable at maturity, thus allowing the project to complete without any impact on their existing bank facilities and no dilution for shareholders.

The hotel commenced operations shortly after our investment, and the owners were able to refinance the entire capital structure, repaid the existing debt, redeemed the preferred equity and released some cash to the shareholders.

So, businesses can find that alternative finance in fact represents an ideal funding instrument: quick and more flexible than bank debt without the complications of issuing a bond. Meanwhile, for investors, it offers the potential to participate in interesting business opportunities at a lower point on the risk curve than equity with attractive returns.

All of which makes the “alternative” a viable and appealing option. As the youngest and now third largest asset class in the private capital universe, global private debt assets under management (AUM) have consistently grown and expected to reach 41 trillion by 2021. The alternative is playing an increasingly important role on the global stage to cater to an ever changing environment.

The expectation is that the trend will continue, particularly in markets such as the GCC.

– Natasha Hannoun is Head of Investment Solutions at Shuaa Capital.

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