Here's How to Win the Balance Transfer Game

The average American household pays roughly $1,000 in credit card interest and fees each year. It doesn't take a whole lot of credit card debt to get you there. If you had a $5,000 balance on a 19.99% APR credit card, you'd pay about $1,000 in credit card interest over a year.

If you're trying to get out of credit card debt, a balance transfer card can help. A balance transfer card is a credit card that lets you transfer the balance from a different card. Usually, you get a 0% temporary APR for the amount you'll transfer. However, most cards charge a fee of 3% to 5% of the transferred amount.

Ready to play the balance transfer game? Follow these tips to win.

Look for a long 0% APR period

A balance transfer card saves you money because while that temporary 0% APR is in effect, your entire payment goes toward the principal. That's why you should look for the longest 0% interest period possible. The best balance transfer cards have a temporary 0% APR period for anywhere from 12 to 21 months -- and the longer the better, since interest won't accrue during that time.

Find a card that offers 0% APR on balance transfers and purchases

Many balance transfer cards don't extend that temporary 0% APR to new purchases. Look for a balance transfer card that has 0% interest for balance transfers and purchases. Otherwise, avoid making new charges on your balance transfer card and focus on paying off the debt.

Minimize fees and avoid late payments

A typical balance transfer fee is 3% to 5% of the amount you transfer. If you transfer $5,000, your starting balance would be $5,150 at 3% versus $5,250 at 5%. In other words, the 3% transfer fee saves you $100 off the bat. Also look for a card that doesn't have an annual fee. When you're getting out of debt, you want your money going toward the principal balance, not interest and fees.

If you make a late payment or miss a payment altogether, most cards will terminate the 0% promo period. Be sure you understand all the terms of your credit card and can afford the minimum payments before you do a balance transfer.

Make a plan to pay off the balance in full

The most important thing to remember about 0% APR cards is that the 0% is only temporary, so the goal is to pay off your balance before it ends. But balance transfer cards have the same minimum monthly payments of about 1% to 3% that regular cards charge. If you only make the minimum payments, you'll have a balance left over by the end of the temporary 0% APR period, and you'll start paying interest again.

Suppose you transfer a $3,000 balance to a card with a 15-month 0% APR period. You aren't making new purchases on the card. Rather than making minimum payments, divide the balance ($3,000) by the number of interest-free months (15). That equals $200. You'd aim to pay $200 each month so that your balance is gone by the time the card starts charging interest.

What are some good balance transfer cards?

The best balance transfer card will depend on your situation, of course. For example, if you have a large balance, you probably want the longest 0% APR and lowest fees possible and shouldn't worry about rewards. But if you're transferring a relatively small amount, you may want to think about maximizing credit card rewards. Here are a few good picks for balance transfer cards:

• BankAmericard® credit card: The card offers a 0% temporary APR for 18 billing cycles on purchases, as well as balances transferred within the first 60 days. After that, the card has a 15.49% - 25.49% (Variable) APR. It doesn't offer rewards, but it has a $0 annual fee and no penalty APR. Read our full BankAmericard® Credit Card review.
• Wells Fargo Active Cash® Card: The card offers a 0% temporary APR for the first 12 months from account opening on purchases and qualifying balance transfers. After that, you'll be charged a 19.24%, 24.24%, or 29.24% Variable APR. (See rates and fees.) The card also has no annual fee and offers 2% cash back, plus a $200 cash rewards welcome offer when you spend $500 on purchases in the first 3 months. Read our full Wells Fargo Active Cash® Card review.
  • Apply now for the Wells Fargo Active Cash® Card.
• Chase Freedom Flex®: The card has a temporary 0% APR on purchases and balance transfers for the first 15 months. After that, the card has a 19.74% - 28.49% Variable APR. The card gives you a flat 1% cash back on all purchases but allows you to earn up to 5% on select purchases. There's also no annual fee and a welcome bonus when you make $500 in purchases during the first 3 months. Read our full Chase Freedom Flex® review.
  • Apply now for the Chase Freedom Flex® card.

What credit score do I need for a balance transfer card?

Most balance transfer cards require good credit, which FICO defines as a score of 670 or higher. While there are balance transfer cards for bad credit, most aren't worth it. These cards rarely offer a 0% intro APR. They may offer a temporarily reduced APR, but the rates are still high.

Moreover, these cards are usually secured credit cards, which means you put down a deposit that serves as your line of credit. A secured credit card can be great for establishing credit or improving a bad credit score. But it doesn't make sense for balance transfers, where the goal is lowering your interest rate. If you have enough cash to put down the deposit and make the transfer, you'd be better off simply paying the balance on your existing card.