For each card, we also note how much it would cost, in interest payments, to pay off $2,500 in one year, $5,000 in two years, $7,500 in three years and $10,000 in four years.
The estimates depend on introductory APR periods, interest rates thereafter, the balance transfer fee and rewards. The figures are ranged based on the variable APR you might qualify for, which, like your credit limit, is determined by your creditworthiness. We did not factor into the estimates what you might earn from cash back or sign-up bonuses. That's because when you first transfer a balance onto these cards, you probably have little available credit, in which case you would not be able to use the card to make many purchases.
We did, however, consider each cards' reward structure while assessing each cards' overall value, since cash back becomes accessible after users pay off enough of their balance and have credit available. To estimate the monthly returns from rewards, we used expenditure data from the Bureau of Labor Statistics to make a sample budget broken down by average annual spending in categories like gas ($1,909), groceries ($4,049), dining out ($3,154) and general purchases ($12,833). The general spending category includes shopping, entertainment, public transit, vehicle expenses other than gas, some household costs and travel expenses.
The estimates assume you have a high credit limit and that you use your card for 90 percent of the purchases you make in these categories, accounting for instances where you have to use cash or shop somewhere that doesn't accept your card.
In the case of a flat-rate cash-back card, calculating the monthly return from rewards was relatively easy, as users save the same amount on all its purchases. For a card like the Discover It, meanwhile, we calculated the potential returns in each category, which change quarterly, and divided the annual sum by 12.
In short, each credit card was evaluated based on how quickly and efficiently it can help users get out of debt, its extra perks and its long-term value.
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