Should You Transfer a Credit Card Balance in 2024? Here Are 3 Key Questions to Ask Yourself

Although credit card interest rates have risen considerably over the past couple of years, it's still possible to find 0% intro APR balance transfer offers lasting as long as 21 months.

Balance transfers can be an excellent financial tool in many cases. They can help you consolidate credit card debt and ensure that every penny you pay is applied to the principal, not toward putting interest income in your bank's pocket. But they don't make sense in every situation.

With that in mind, here are three important questions to ask yourself before applying for a new balance transfer credit card.

1. Is the balance transfer fee worth paying?

If you've never transferred a credit card balance before, you might not have realized that it isn't free. At least, not usually.

Balance transfers typically come with a fee that ranges from 3% to 5% of the amount you transfer, and this is true whether you are taking advantage of a 0% intro APR balance transfer offer or not. In other words, if you transfer $5,000 worth of credit card balances, you can expect $150 to $250 to be added to the new balance once the transfer is completed.

So, one of the biggest questions to ask yourself is whether the fee is worth paying or not. In some cases, the answer can certainly be yes. For example, if your credit card debt has a 25% APR and you can get a 0% APR balance transfer for 18 months, the long-term interest savings can justify paying the fee. But if you could leave the debt where it is and knock out your balance in just a few months, it might not be worth paying.

2. How fast can you pay off your debt?

Before you use a 0% intro APR balance transfer offer, you need to be sure that you can reasonably afford to pay off the entire balance before the introductory period runs out. You can do this by taking the balance you plan to transfer (including the balance transfer fee) and dividing it by the number of months your card is offering a 0% intro APR.

For example, let's say that your card offers an 18-month 0% intro APR on balance transfers and a 3% balance transfer fee. If you have $5,000 to transfer, you'll have a $5,150 balance on the new card. Dividing this by 18 months shows that you'll need to pay about $286 per month to get the balance to zero before the promotional period expires.

3. Could a personal loan be the better choice?

Depending on the answer to the last question, one thing to ask yourself is whether you might be better off using a personal loan to help get out of credit card debt. To be sure, personal loans don't have 0% intro APR deals (at least not any we've heard of!).

However, personal loan interest rates can be significantly lower than your credit card's APR. Plus, you can get repayment terms of as long as 72 months (six years) or even more in some cases, which can help keep your monthly payment more affordable.

Personal loans also have significantly higher borrowing limits than most balance transfer credit cards, and also tend to be better for your credit score. Installment debt is generally considered more favorably in the FICO® Score formula, and that's especially true if your balance transfer essentially results in a maxed-out credit card.

The bottom line

Every financial situation is different, so there's no perfect answer for everyone. In some cases, a balance transfer can be a great financial tool. However, for some consumers, a personal loan is the better way to go, and in other cases it could make sense to simply leave your debt where it is and pay it down as aggressively as possible.