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By Jason Steele
December 29, 2020
Money; Getty Images

With the holidays behind us, many Americans are left with large amounts of credit card debt that they accumulated during holiday shopping. And as unsecured debt that is never tax deductible, credit card debt can be far more costly than other types of loans such as home mortgages or student loans. But because the credit card industry is so highly competitive, many card issuers will offer interest free promotional financing options that can be ideal for getting rid of your holiday debt.

How to find a great balance transfer credit card

While there are fewer credit cards that offer 0% APR balance transfers than there were in 2019, there are still some great offers available. Most of the cards with these balance transfer offers have no annual fee, so comparing those fees isn’t a good way to pick a card. However, all the balance transfer cards currently available will impose a balance transfer fee, which is a percentage of the amount you transfer onto the card, which is then added to your new balance. Most of these cards will have a balance transfer fee of 3% of the amount transferred, but some have a fee of up to 5%. By avoiding offers with balance transfer fees above 3%, you’ll save money on fees while reducing the amount of your new balance.

Along with the card’s balance transfer fee, you should look at the duration of the promotional financing period offered. By law, these 0% APR financing offers must last at least six months, but the best cards will offer at least 12 months of interest-free financing. Other factors worth considering is the existence of 0% APR promotional financing on new purchases, any rewards offered and any welcome bonus available.

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The best balance transfer credit cards available now

US Bank Visa® Platinum. This card features the longest promotional financing offer available from any major credit card issuer. New accounts receive intro 0% APR financing on both balance transfers and new purchases for 20 billing cycles. There’s a 3% balance-transfer fee and no annual fee for this card. After that the ongoing APR is 14.49% – 24.49% APR.

Citi® Double Cash. While this is one of the top-rated cash-back credit cards, the Citi Double Cash card also has a very competitive balance transfer offer. New accounts receive 18 months of 0% intro APR financing on balance transfers completed within four months of account opening (after that, 13.99% – 23.99% APR). This card has a 3% or $5 balance transfer fee (whichever is greater), and no annual fee. It also offers 1% cash back on your purchases at the time of the transaction, and another 1% cash back when you pay for your purchases, for a total of up to 2% cash back on all purchases, with no limits. However, you won’t receive any cash back on balance transfers.

Citi® Diamond Preferred® Card. If you’re looking for a simple card that has a strong balance transfer offer, the Citi Diamond Preferred card is worth considering. It features 18 months of 0% introductory APR financing on both new purchases and balance transfers (after that, 14.74%-24.74% APR), with a 3% or $5 balance transfer fee (whichever is greater). There’s no annual fee for this card.

How to user a balance transfer card in 2021

Balance transfer credit cards can be useful financial tools. But like any kind of tool, how you use it will greatly affect the results you see. The best way to take advantage of one of these offers is to begin with goal of paying off your entire credit card debt before the promotional rate ends and the standard rate applies to your remaining balance. A simple way to achieve this is to divide your outstanding balance by the number of months remaining in your promotional financing offer, and pay off that amount each month. At the same time, it’s important not to use credit cards to accrue new debts that simple replace your previous debts.

Unfortunately, some credit card users will look at these balance transfer offers as a way to postpone paying off their balance, rather than as a motivation to pay it off sooner. And while some believe that they can simply apply for a new, similar offer before theirs expires, this is a risky strategy that can lead to a cycle of debt.

Bottom Line

We’re all looking forward to a better 2021, and a great way to start is to pay offer your remaining credit card debts. By using a balance transfer credit card, and managing it wisely, you can get rid of your holiday debt much sooner than you might have thought.

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