Balance-transfer credit cards help tackle debt by letting you move a balance from a card with a high interest rate to one that temporarily charges no interest. But how long that introductory period lasts varies from card to card.
To determine which credit cards are the best for getting out of debt overall, CNBC Make It compiled a list of 25 highly rated cards with no-interest offers and low annual percentage rates. We estimated how long it would take to pay off a range of debts at different rates, as well as how much interest you'd pay with each card. We also considered rewards and other perks, and downsides such as late fees and penalty interest rates.
With 20 months of 0 percent APR on purchases and balance transfers, the U.S. Bank Visa Platinum card was our No. 1 choice for the best balance-transfer card overall. But another card on our list had an even longer no-interest period for balance transfers.
The Citi Diamond Preferred has 0 percent APR on balance transfers for 21 months, as long as the transfers are completed within the first four months. Other cards featured on the best balance-transfer card list have introductory periods ranging from 15 to 20 months. On new purchases, the Citi Diamond offers no interest for a year. The variable APR after the introductory period is 14.74 to 24.74 percent based on your creditworthiness.
The long APR comes at the cost of a 5 percent balance transfer fee. That's higher than the 3 percent some of the other cards offer. But if you have a large balance, around $7,500 or higher, and you expect it to take 21 months or longer to pay that balance off, the fee is worth it.
The average American borrower has a credit card balance of $5,644. If you maintain that balance and pay interest on it at a rate of 15 percent, roughly the national average, you pay about $850 in interest every year. If you were to start paying off the card at $200 per month, it would take 36 months and cost $1,360 in interest payments.
Now, let's say you transfer the balance to the Citi Diamond Preferred. If you pay it off at the same rate, it will take 31 months and cost about $390. In other words, by moving your balance to the card, you could save $970. That's accounting for the balance transfer fee, and it's assuming your variable APR after the introduction period is 14.74 percent, the lowest the card offers.
While the Citi Diamond Preferred is great for paying down large balances, the card doesn't offer spending rewards. It does provide users with Citi Private Pass, which offers presale tickets and VIP packages to concerts and other events.
To determine which credit cards are best for getting out of debt, CNBC Make It compiled a list of 25 highly rated cards, most of which are recognized as balance-transfer cards. Others are considered cash-back cards first but still have features that help users get out of debt. We vetted each card based on its reward offers, introductory and eventual APR, annual fee, bonus, recommended credit score, late fee, balance transfer fee, foreign transaction fee, redemption rates, transfer options, customer reviews and extra perks.
We then estimated how long it would take and how much it would cost for each card user to pay off various levels of debt — $2,500, $5,000, $7,500 and $10,000 — at different monthly payment rates, including $100, $200, $300 and $400. For each card, we also note how much it would cost, in interest and fees, 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 also considered each card's reward structure to determine its overall value, since cash back becomes accessible after users pay off enough of their balance and have credit available.
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. For more details about how balance-transfer cards work and how we decided on the best, check out our full list.
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