There are several key factors to keep in mind when selecting a balance transfer credit card, including:
Balance transfer rate
The balance transfer rate is the interest rate you'll be charged on your transferred balance during the promotional period. Most balance transfer credit cards offer balance transfer rates in single digits, but you'll also find deals offering no-interest periods.
Balance transfer fees
Some credit card issuers may charge a one-off balance transfer fee – which is typically around 1-3% of the total amount you transfer. However, not all credit card providers charge a balance transfer fee, and it's worth comparing your options.
Annual fees
Annual fees on balance transfer credit cards could range from a few hundred dollars to absolutely nothing. Some balance transfer credit cards may advertise low or no annual fees, but this may only be valid for a limited period. Remember to read the terms and conditions closely to find out about any hidden charges or promotional rates that may increase in future.
Purchase rate
The purchase rate on a credit card is the interest you pay on your regular purchases made using the card. It is usually higher than the balance transfer rate offered by a card issuer and generally applies to any new purchases you make using the card. The purchase rate is also the interest rate you'll pay on any outstanding balance left on your card after the promotional interest rate period expires.
Balance transfer caps
A balance transfer credit card could come with a transfer limit that typically depends upon your approved credit limit. While some credit card issuers may allow you to transfer funds up to your new card's full credit limit, others may cap it to a percentage of your overall credit limit.
Length of the introductory period
A balance transfer card could help you repay your debts faster, but your success with the strategy also depends on the time you get to repay your debts. You can use a balance transfer calculator to analyse various options and estimate the timeframe required to repay your debt. If you can't clear off the transferred balance in the promotional period, you may be charged a higher interest rate and late fees.
Perks and rewards
Does your new card offer any rewards program or other perks, like travel insurance, once you’ve paid off the transferred balance in full? If so, what is the annual fee you are paying to avail of these benefits and do they match your spending patterns and lifestyle?