Alleviate Post-Holiday Debt with a Balance Transfer Credit Card

Alleviate Post-Holiday Debt with a Balance Transfer Credit Card

If you’ve racked up debt on various credit cards over the holiday season, a balance transfer credit card could be one of your best tools to pay down debt while improving yourcredit score.

The beauty of a balance transfer credit card is that it allows you pay down your credit card debt at a lower interest rate than your current credit card. During the holiday season, when consumers are spending a reported average of $689, a balance transfer card can work immensely to your benefit, especially if you have debt on a high-interest rewards or retail card.

If you are thinking about wielding this weapon to tame your debt, here are the pros and cons to consider before you add more plastic to your wallet:


  • Balance transfer cards have a lower interest rate than typical credit cards, minimizing the interest you pay for carrying credit card debt month to month.
  • The best balance transfer credit cards offer an introductory 0% APR on balance transfers for six to 18 months and 0% APR on purchases for six to 12 months. Transfer your holiday spending spree and pay it off in the next few months without paying a dime in interest.
  • Getting a new credit card can help your credit score. Adding to your overall available credit while maintaining the same amount of debt will lower your credit utilization rate, which is a significant factor of your credit score. Keeping your credit card utilization rate, your credit card debt versus your overall credit card limits, under 30% can significantly improve your score.
  • Consolidate multiple credit cards’ debts onto one lower-interest credit card, which will make payment easier and more convenient.



  • Balance transfer credit cards have a balance transfer fee around 3% to 5% of each amount transferred, which can add up significantly if you have a large balance. Think of it as a one-time price to pay to save on future interest payments (which, in contrast, is 15% to 20% of your balance each month).
  • With an introductory 0% APR on purchases, you might be tempted to use your card. This is a big red flag—don’t let this card get you into more debt. Use the 0% APR period to fully pay off your outstanding balance, or else you’ll be subject to interest charges once the introductory period is over.
  • Getting a new credit card will lower your credit score a few points due to a hard inquiry. This can’t be avoided, but will do little damage to your credit as long as you keep hard inquiries to one or two every year.

Finally, make sure it makes overall financial sense to get a balance transfer card, given the balance transfer fees and other charges involved. Two of our favorite balance transfer credit cards is the Citi Platinum Select MasterCard, which offers a terrific 0% APR on balance transfers for 24 months and purchases for 12 months, and the Capital One Platinum Prestige Credit Card, which resets to as low as 10.9%  APR after the introductory period.

Remember, a balance transfer credit card can be a double-edged sword: one that can help you deal with your debt, and one that can help you accrue more debt. If need be, stash your balance transfer credit card somewhere so you won’t be tempted to use it. ‘Tis the season for a debt-free New Year.

Credit Karma™ is a completely free credit management service that provides free credit scores, financial education, and personalized savings recommendations. We help more than 2 million consumers realize the everyday cost savings of having a good credit score.


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