In the past year, we’ve seen more credit cards that provide zero percent APR balance transfers. These cards are good if you carry a balance on an existing credit card and struggle to pay it off because of interest charges. If you transfer your balance to a credit card that has a zero percent APR balance transfer, all of your payment will go to pay off your principal for the duration of the zero percent period (typically 12–18 months).
BUILD YOUR CREDIT. Experts tell us that secured credit cards, which are credit cards that require a refundable deposit, are more common than ever before.
“Zero percent APR balance transfers are best used when consumers can see a bright light at the end of the tunnel and have reason to believe that they’re going to pay off the debt,” McQuay explains.
However, that doesn’t mean that you should use zero percent APR balance transfers to put off paying your debt long term.
“The unfortunate part is that people think that at the end of their 15, 18 months, they’ll apply for another zero percent APR card and move the balance to that card,” Steele says. “Of course, that could actually prevent you from getting a card. A lot of debt hurts your credit score. I wouldn’t recommend zero percent balance cards as a perpetual funding mechanism.”
Zero percent APR balance transfers also are good for credit-card issuers, which use them as a way to poach customers from other issuers, McQuay says. That’s because you can’t transfer a balance within the same bank. For example, if you have debt on a Chase credit card, you can’t transfer that debt to another Chase card. However, you can transfer the debt to a credit card that’s provided by any other issuer.
“If someone is irresponsibly carrying credit-card debt month to month, moves it to a new card with a zero percent balance-transfer offer and still doesn’t pay it off, that could be very profitable for the new issuer after the zero percent period ends,” says John Ganotis, who is the founder of Creditcardinsider.com, which covers the credit-card industry.
You should keep in mind that most zero percent APR balance-transfer credit cards have a balance-transfer fee of 3 percent or 5 percent. We found just two credit cards, Barclaycard’s Ring and Chase’s Slate, that have no fee for balance transfers that you make within the first 60 days of when you open an account. Ring and Slate also allow a zero percent APR on balance transfers and purchases for the first 15 months and charge no annual fee.
RISK OR REWARD? All of the experts whom we interviewed tell us that the terms and redemption rules of travel miles and points
programs have become increasingly confusing over the past 3 years.
“I’m not sure why no-balance-transfer-fee cards are so unusual,” Steele tells Consumers Digest. “Unfortunately, we’re so used to companies adding fees at random that relatively few people seem to notice or care.”
NEW-CARD BONUS. In the past 2 years, most of the 11 major credit-card issuers boosted, and sometimes doubled, sign-up bonus points, so they would attract customers.
Sign-up bonuses reached a peak in August 2016, when Chase introduced its Sapphire Reserve Card, which gave consumers 100,000 bonus points (or $1,500 toward travel through Chase Ultimate Rewards) when they spent $4,000 on the card during the first 3 months that they had it. What’s more, cardholders also received up to a $300 return on the $450 annual fee, as long as they spent $300 on travel expenses. Chase’s 100,000-point offer expired in January 2017, but as of press time, the credit card had a sign-up bonus of 50,000 points if you spend $4,000 during the first 3 months that you have it.
“Chase’s 100,000 bonus points were the Holy Grail,” says Brian Karimzad, who is the director of Milecards.com, which monitors and rates credit-card rewards programs. “Those kinds of offers don’t come around often. When you see that kind of deal, it’s a good sign that the bank is wanting to increase market share and is willing to offer you rewards to win you over.”
Chase’s Ink Business Preferred Card, which provides 80,000 points after you spend $5,000 during the first 3 months that you have it, is the best sign-up-bonus offer that we found as of press time. Sign-up bonuses that dangle 30,000–50,000 points in front of you are common and likely will remain available indefinitely, Karimzad says.
We also found that 80 credit cards (60 percent) have no annual fee, which is about the same number as before. However, a growing number of credit-card issuers eliminated foreign-transaction fees. We found that 47 credit cards (35 percent) have no foreign-transaction fee as of press time, compared with 37 credit cards (24 percent) that didn’t have it in 2014.
Citibank’s Citi Simplicity is the only credit card that we found that doesn’t apply late-payment fees or penalties. You’ll pay interest on your balance, late payments will show up in your credit report, and Citibank can revoke your card if you miss too many payments. However, it’s still good news whenever a credit-card issuer decides not to charge a fee. No other credit-card issuer says it plans to eliminate late fees.