Benefits of Transferring Debt to Zero Fee Credit Cards

May 7th 2016

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The credit card business is more competitive than ever, and many companies are lowering interest rates, cutting fees and adding tons of perks for their spenders. Now is the time to have creditors fight to win you as a customer. 

Zero fee credit cards offer customers a wide range of benefits, mainly by eliminating certain fees that could be tied to a credit card. Credit cards that currently offer zero fees are a tool to be used by credit rookies and pros alike, and can save you money over time if used correctly. Like any credit card, though, the benefits come with a few strings attached. Here is a rundown of the benefits of zero fee credit cards and a few pitfalls to watch for.

Zero Fees Annually

Almost all zero fee credit cards start by eliminating annual fees required by the creditor to use their card. These fees typically help cover the cost of extra services provided by the card, including concierge benefits and monthly credit bureau reporting. 

These fees can range from $5 to $100 annually, but are generally waived on a zero fee credit card to entice applications and spending. Almost all of the major creditors offer a zero annual fee credit card, including Chase, Discover and Citi.

While these types of credit cards can be enticing, it is important to read the fine details when applying. Some of the annual fees may come back after the first year, while others may require a certain amount of spending per month or year to waive the annual fee.

Zero Fee Balance Transfers

Another fee commonly waived in some zero fee credit cards are those associated with balance transfers. These credit cards allow users to transfer a certain amount of credit from one card to another. The major benefit is that the creditor will not charge a fee for the transfer. Most balance transfer fees can cost anywhere from 3 to 5 percent of the total amount transferred.

The main benefit of this type of credit card is that you consolidate debt at a lower interest rate without paying fees for the transfer. Theoretically, you will be able to pay more of the principal off per month and less on interest.

One of the important items in this type of offer is what the interest rate will be on the balance transfer. It doesn't make sense to transfer a balance to a higher interest credit card.

Zero Fee Interest Rate

Similar to zero fee balance transfers, many creditors offer new accounts or initial balance transfers for a certain amount of time with no interest charged. These types of credit card deals are great for a large purchase that can be paid off over an amount of time without being charged interest.

These cards are very popular at appliance and home improvement retailers, such as Home Depot, Lowe's and Sears. Some cards are interest-free for up to 18 months, while others are only interest-free for six months. Most major creditors also offer these services.

Zero interest rate cards are a great resource for those needing to pay off a credit card within a quick period of time or pay for a major expense. However, these cards often come with a very high interest rate once the introductory no-interest period expires.

Perks Included with Zero Fee

Although many of the zero fee credit card offers stress the waiving of extra fees, they do not skimp on the perks included in those cards. Anyone who has searched for a credit card knows that perks come in all shapes and sizes. From free airline miles to cash-back and even free gasoline for your car, there are plenty of options to satisfy every customer.

Capital One’s Quicksilver Card offers 1.5 percent cash-back on all purchases and does not charge interest until 2015. Neither does Bank of America’s Cash Rewards credit card, which offers 1 percent bag on all purchases, 2 percent on groceries and 3 percent on gas.. The point is that opting for lower or no fees does not come at the sacrifice of rewards.

Zero fee credit cards are a great option for all types of credit card users. No two cards will be the same, so do your homework, compile data and pick the rewards that suit your needs.


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