By taking advantage of the 0% balance transfer promotional offer, you can make your financial life easier if you can consolidate your credit card debt at a lower rate.
While transferring a balance may seem easy enough, you may run into trouble if you try to transfer amounts from one card to another at the same bank. Banks have rules for this process and these tips can shed some light on what you need to know when choosing your next balance transfer card.
Why banks do not allow balance transfers to the same bank
When you transfer a balance, you move the amount you owe from one card to another. The receiving card can be an account you already have or a brand new account you open to take advantage of the low promotional rate.
Banks make money through a combination of interest and fees. For example, you can pay more than $95 per year for your card that the bank collects every year. If you have a balance at the regular annual interest rate, the bank also benefits from the interest you pay.
That’s why, in a nutshell, banks usually won’t let you transfer balances between cards at the same financial institution.
“There is no law forbidding this; it’s just not profitable for banks,” says Cary Zylke, a former personal finance expert at Realities and Dreams.
“Zero-interest balance transfer offers are used to attract new customers,” says Zielke. “You are already their customer and they are already making money off your credit card interest.”
This leaves little incentive for the bank to allow you to transfer that balance to another card where you will not pay interest on the balance during the promotional period.
John Pham, founder of The Money Ninja, says banks’ balance transfer fees, which can range from 3% to 5%, are usually not enough to make up for lost interest by allowing you to switch to a card with a lower rate.
“This is not such a big risk for the bank, but in their eyes you are most likely not a profitable client for them,” Pham says.
Are there exceptions for business credit cards
The rule, which you may or may not see in your card’s terms and conditions, applies to transfers using both personal and corporate credit cards.
So, for example, if you have a balance on your Chase Ink Business Unlimited® credit card, you will not be able to transfer that amount to another Chase card. But you can still transfer your business credit card balance to another business card at another bank. You can also transfer the balance to a personal card in another bank.
The caveat to moving corporate debt to personal cards is that having a balance can affect your personal credit score because it changes your credit utilization ratio, which is the amount of credit you use divided by your total credit limit.
You can try to get around the rules by transferring the balance to a card in another bank and then transferring it back to your current bank. But the downside is twofold: your credit score gets worse with each new request, and you pay double the balance transfer fee.
Search for other balance transfer offers
It is frustrating to encounter a 0% balance transfer promotion that you cannot qualify for because it is issued by your current bank. That’s when you need to look around to see what else is available.
Rick Orford, founder of finance blog Surplus Academy, advises looking at the annual interest rate and fees first, and then proceeding to check the fine print.
“The best balance transfer offer has no annual fee, 0% APR, and a balance transfer fee of 0% to 2%,” says Orford.
Then see how long it will take you to repay the transferred balance without interest. Zielke prefers to choose the card with the longest promotion period.
“The longer you have with zero interest, the better you can maximize your ability to pay it off before it runs out,” he says.
When considering offers, see how much you want to transfer. You need to be sure that the card you are applying for can offer a high enough credit limit to accommodate the full amount of the transfer. Orford recommends trying to negotiate with your card issuer to get a higher credit limit if needed.
Balance Transfer Card Recommendations
If you’re looking for card recommendations, here are some of them:
| Map name | Balance Transfer Offer | Fees | Other card privileges |
|---|---|---|---|
| Wells Fargo Platinum Card* | 0% introductory annual interest rate for the first 18 months from account opening for qualifying balance transfers. After that, the usual APR variable is from 16.49% to 24.49%. | Balance Transfer Fee 3% for the first 120 days of account opening (minimum $5), up to 5% thereafter (minimum $5). Annual fee $0. | 0% introductory annual interest rate for the first 18 months from account opening on new purchases. |
| BankAmericard® credit card | 0% introductory annual interest rate for the first 18 billing cycles for balance transfers made within the first 60 days. After that, the usual APR variable is from 12.99% to 22.99%. | Balance Transfer Fee 3% or $10, whichever is greater. Annual fee $0. | No interest per annum. 0% introductory APR also applies to purchases. |
| Citi® Dual Cash Card | 0% introductory APR for the first 18 months. After that, the usual APR variable is from 13.99% to 23.99%. | Initial balance transfer fee of 3% or $5, whichever is greater. Balance transfers must be completed within the first four months of account opening in order to qualify for the initial APR and balance transfer fees. Annual fee $0. | Get 1% cashback when you make purchases. Earn an extra 1% cashback when you redeem them. |
bottom line
Whichever balance transfer card you choose, you should have a plan to pay off the balance before the agreement expires so you don’t get stuck with interest payments, says Orford.
And if, for some reason, you’re denied a balance transfer, you can try a consolidation loan instead, Zilke says. The catch here is that you probably won’t find 0% APR on a personal debt consolidation loan. Before completely opting out of getting a better APR deal on your card, contact your bank.
“If you don’t qualify for a balance transfer, one option you should consider is to call your current credit card company and ask for a lower interest rate,” Pham says.
Banks may sometimes do this as a goodwill gesture for customers with a solid credit history and a good account history. “It may not be as low as you are looking for, but it will reduce the overall interest rate you will pay over time,” Pham says.
*All Wells Fargo Platinum card information has been collected independently by CreditCards.com and has not been verified or approved by the issuer.
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