Zero-Interest Balance Transfer Offers More Plentiful Than a Year Ago, Even as Fees Tick Higher

With the Year of the Interest Rate Hike over and Americans continuing to contend with stubborn inflation and general economic uncertainty, a new LendingTree report brings some good news. Despite a run of seven Federal Reserve rate increases last year that sent credit card APRs to their highest levels in decades, balance transfer credit cards with 0% intro APR offers are more widely available than at the start of 2022.

These cards, which can come with a 0% intro APR for up to 21 months, are perhaps Americans’ best weapons in the fight to reduce credit card debt. They could save you a lot of money and reduce the time it takes to pay down your balance. However, it was unclear whether these cards would be as plentiful during the torrent of Fed rate hikes. Those concerns have proved to be unfounded, at least for now.

The news isn’t all great, though. We have seen fees rise slightly on some of these cards, with no guarantee that issuers won’t rein in these offers as the Federal Reserve continues to raise rates — albeit likely slower — in 2023. But for now, Americans with good credit looking to refinance or consolidate high-interest credit card debt will probably have strong options.

Still, it’s unclear how many cardholders will use these tools. While our latest survey shows that 6 in 10 folks with card debt have had it for at least a year, it also hints at a reluctance among debtors to get a new card to help with that debt. It even shows the persistence of a long-held myth that may lead people to believe that 0% balance transfer credit cards aren’t quite as good a deal as they are.

Key findings

• Balance transfer offers are more widely available at the start of 2023 than at the beginning of 2022. Yes, credit card interest rates are rising, thanks mostly to the Federal Reserve, but 0% intro APR balance transfer offers remain plentiful. In fact, card giant American Express recently re-entered the balance transfer game after putting the brakes on offers in the darkest days of the COVID-19 pandemic.
• The longest-lasting zero-interest balance transfer offer is 21 months, and more cards now offer that duration. 12 months is the most common duration, but 15-month offers are widely available, too.
• Our data analysis shows a slight uptick in cards with higher balance transfer fees. A 3% balance transfer fee remains the most commonly found with 0% intro APR offers. However, 47% of zero-interest balance transfer card offers come with fees of 4% or 5% — up from 46% in September and 43% in January 2022.
• 0% intro APR purchase offers are more common on balance transfer cards than at the start of 2022. Balance transfer cards aren’t always solely about transferring balances. They can also offer 0% intro APRs on new purchases. Nearly 6 in 10 (58%) zero-interest balance transfer cards come with 0% intro APR offers on transfers and new purchases — largely unchanged from September and up from 50% in January 2022.
• Among those with card debt who’ve never gotten a balance transfer credit card, the most common reason is that they don’t want to open a new card. Nearly 1 in 3 (32%) with card debt say this.
• A cockroach of credit card myths lives on. 75% of credit cardholders believe that if you don’t pay your transferred balance in full during the 0% introductory period, you’ll get hit with a retroactive bill for all the interest you would’ve accrued. It’s typically not true.

Zero-interest balance transfer cards are widely available

The right 0% balance transfer credit card, used wisely, can save you hundreds of dollars or more in interest over the life of the balance. For example, if you take 15 months to pay off a card with a $5,000 balance and a 20.40% APR — the average rate for cards carrying a balance today, according to the Fed — you’ll pay $605 in interest during that period. Transfer that balance to a card with a 0% offer for 15 months and pay it off during that time and you’ll pay no interest. You’ll likely pay a one-time fee of 3% to 5% — totaling $150 to $250 — but you’ll still come out far ahead on the deal.

A relatively small collection of megabanks dominates the credit card space, and that doesn’t change when you’re talking about 0% intro APR balance transfer offers. However, those giant banks aren’t the only ones in town, so LendingTree cast a wide net to get a full view of the balance transfer credit card landscape. We looked at the biggest banks, of course, but we also looked at other banks and credit unions.

The biggest change in recent months is the return of American Express to the balance transfer space. During the pandemic, AmEx eliminated balance transfer offers. However, that changed in recent months. At the time of this writing, the card giant lists five cards with 0% intro APR balance transfer offers on its website, offering either 15 or 12 months interest-free. That number of cards offered hasn’t changed since our September report.

Most AmEx cards still don’t feature 0% intro APR balance transfer offers — or even allow balance transfers — but this is a significant development that stands to make an already exceptionally competitive marketplace even more so. Consumers tend to benefit when that happens.

0% intro APR balance transfer offers typically last a year or more, going up to 21 months

The aforementioned American Express offers are in line with typical 0% intro APR balance transfer offers seen today.

Our December 2022 review of 119 zero-interest balance transfer card offers shows:

• Most common duration of 0% intro APR balance transfer offers: 12 months
• Percentage of 0% intro APR balance transfer offers lasting either 12 or 15 months: 80%
• Longest zero-interest offer: 21 months

Those numbers are largely unchanged from the start of 2022, though we have seen the number of cards offering 21 months interest-free jump from three in January 2022 to six today.

However, it’s unclear how long these long-lasting offers will stick around. As the Federal Reserve raises rates, borrowing doesn’t just become more expensive for consumers. It becomes more expensive for banks, too. As that happens, it becomes more challenging financially for banks to offer zero-interest deals. As a result, banks may shorten the length of the typical 0% intro APR offer, or provide fewer deals altogether.

We’re certainly not seeing either of those things today. (If anything, our December review of offers reveals a slight improvement in offers, with four cards lengthening their 0% offer duration since September and just one shortening it.) However, there are other ways issuers can tinker with balance transfer credit card offers to make them a little more profitable, including increasing the fees associated with them. That’s already starting to happen, though not in a widespread manner.

Higher balance transfer fees slightly more common

Most 0% intro APR balance transfer credit cards charge a one-time fee each time you transfer a balance. The most common fee is 3% of the transferred balance. Most issuers also set a minimum fee of $5, $10 or $15, meaning that if 3% of your transferred balance is less than the minimum, you’ll instead pay the minimum.

For years, 3% has been the industry standard for balance transfer fees. That certainly remains the case today, with 58% of zero-interest balance transfer cards charging that amount, down slightly from 59% in September 2022 and 60% in January 2022.

Our review of 119 zero-interest balance transfer card offers shows:

• Percentage with balance transfer fees of 4% or 5%: 47%, up from 46% in September and 43% in January 2022
• Percentage with balance transfer fees of 5%: 27%, up from 26% in September and 23% in January 2022
• Percentage with no balance transfer fees ever: 5%, down from 6% in September and 8% in January 2022. All these cards come from credit unions.
• Percentage offering reduced or eliminated balance transfer fees during an introductory period: 16%, up a tick from 15% in September but the same as the 16% seen in January 2022. The most common introductory fee offer was 3% for 60 to 120 days before rising to 5%.

These changes aren’t huge, and it’s unclear whether they’re a blip or the start of a longer-term trend, but they’re noteworthy.

If you’re transferring a $5,000 balance, a 3% one-time fee will cost you $150, while a 5% fee will cost you $250. That extra $100 may not rock your world, but it’s not nothing either. When you’re struggling to pay off your debt, every penny matters.

Again, these fee increases are one of the under-the-radar ways issuers can bump up profitability on balance transfer cards without shortening the duration of the 0% intro APR periods. It certainly bears watching as to whether more issuers opt to increase their fees in the coming months as the Fed continues to raise rates, starting with its next scheduled meeting on Jan. 31 and Feb. 1, 2023.

0% intro APR purchase offers becoming more common, too

For most people, the primary point of getting a 0% intro APR balance transfer credit card is to reduce and pay off credit card debt. The cards are hugely popular because they allow people to avoid paying interest on balances they’ve already run up, and the last thing most people want to do is use these cards to run up more purchases. In many ways, it would defeat the purpose of getting the card.

Still, zero-interest balance transfer credit cards have long come with 0% intro APR offers on new purchases as well, and that’s certainly the case today.

Of the 0% intro APR balance transfer credit cards we reviewed:

• 58% came with a 0% intro APR offer on new purchases. That’s up from 50% at the start of 2022, and largely unchanged from 59% in September.
• The longest 0% purchase intro APR period was 21 months. That’s the same maximum length we saw with balance transfer credit cards and is unchanged from January 2022 and September 2022.
• The most common 0% intro APR purchase period was 15 months. That’s longer than we saw with balance transfer offers, though it’s unchanged from the start of 2022.

The rise in 0% intro APR purchase offer availability is good news for consumers if the cards are handled wisely. To be clear, folks using these cards primarily to pay down debt should continue to try to keep any new purchases to a minimum, even with the zero-interest deal. However, if they don’t have debt and are looking for a low-cost way to finance a major purchase or extend their budget for a few months, these 0% intro APR purchase offers are worth considering.

Why credit card debtors who haven’t gotten a balance transfer card have decided not to

Even with all the potential savings, many people with credit card debt never apply for a balance transfer credit card. Among those with card debt who haven’t applied for a balance transfer credit card, our survey showed that some (27%) haven’t because they don’t have enough debt to make it worth their time. Others don’t want to hurt their credit score (17%), are already happy with the card’s APR (15%), don’t want to pay the fee associated with the transfer (15%), don’t know how balance transfer credit cards work (14%) or don’t know about the cards (13%).

The most common reason, however, was simple: They didn’t want to open a new card. Nearly 1 in 3 (32%) say so.

While it’s easy to understand why someone with credit card debt would be reluctant to get a new card, and it may even seem counterintuitive to fight credit card debt by getting a new credit card, the truth is that a 0% balance transfer is perhaps your best weapon in the fight against credit card debt. You’re doing yourself a disservice if you’re struggling with card debt and don’t at least consider getting one. Yes, it requires discipline to not see the available credit on a new card as an excuse to spend. But if you can use the card wisely, the financial savings can be significant.

This stubborn credit card myth lives on

Some people’s reluctance to consider one of these cards likely springs from a basic misconception of how they work. For example, our survey shows that 75% of cardholders believe that if you don’t pay off the entire transferred balance during the 0% introductory period, you’ll get hit with a bill for all the interest you would’ve accrued during that time. That’s typically not true with balance transfer credit cards.

That arrangement, known as deferred interest, is common with so-called special financing deals from retailers. They’ll lure you in with the promise of paying no interest on a purchase for six, nine or 12 months, but if you don’t pay in full during that period — even if you pay $999 of a $1,000 purchase — you’ll get hit with a bill for all the interest you would have accrued going back to the purchase date.

That can be an unpleasant surprise for folks. However, balance transfer credit cards very rarely come with those types of deals. The problem, however, is that millions of Americans think they do, and it’s likely keeping people from considering a tool that could make a big difference in their fight against credit card debt.

Now’s the time to take advantage of these debt-busting tools

The best news from this report is that 0% intro APR balance transfer credit cards are as widely available as they’ve been since the beginning of the pandemic. If you have good credit and are struggling with credit card debt, you’re doing yourself a disservice if you don’t at least consider getting one of these cards. It’s as simple as that.

Before you apply, there are some things you need to ask about the card, including:

• How long does the interest-free period last?
• How quickly must you do the transfer to take advantage of the 0% intro APR rate?
• What’s the maximum amount you’re able to transfer?
• What’s the interest rate on the remaining balance once the introductory period ends?
• How much is the balance transfer fee?
• Does the card have a 0% intro APR offer on new purchases? If so, how long does it last?

Know that the answers to these questions can vary significantly by issuer and card, so shopping around is vital. Failing to do so can end up costing you real money.

It’s also important to understand that there’s no guarantee these offers will last. We’re already seeing a few fee increases and could see more in the future. We could also see issuers begin to shorten the duration of the 0% introductory periods with these cards.

Ultimately, the main takeaway from this report is that now is the time to act if you’ve been considering getting a 0% intro APR balance transfer credit card.

Methodology

LendingTree reviewed offers for 119 credit cards with 0% introductory APR periods on balance transfers. Cards from 36 issuers — including banks and credit unions — were included. We reviewed basic terms and conditions, including APRs and annual fees and evaluated the cards’ balance transfer programs. All offers were reviewed online on financial institutions’ public websites. Credit card offer data is accurate as of Dec. 29, 2022.

Separately, LendingTree commissioned Qualtrics to conduct an online survey of 2,050 U.S. consumers ages 18 to 76 from Dec. 16 to 19, 2022. The survey was administered using a nonprobability-based sample, and quotas were used to ensure the sample base represented the overall population. All responses were reviewed by researchers for quality control.