Why I’m Considering A Balance Transfer Card To Pay Off My Travel Card Debt

I’m still a fairly fresh college grad, and I continue to rock my early graduate journey. I applied for my first credit card (reluctantly) during my sophomore year of college, and it was the Discover It® Chrome Student Credit Card. I know very little about this card, to say the least, and I’m skeptical. As the child of a first-generation credit card user, I generally distrust credit cards and quickly put this student card in the “basically unused” category.

However, as I got older and started my personal finance career (including credit cards, no less), I learned some important information that completely changed the way I think about credit cards. The more knowledge I gained, the more prepared and excited I became to start looking for the next card I applied for. The second card application will be the first card I fully and fully understand. Immediately, I set my sights on travel credit cards.

my first travel credit card

For me, the greatest benefit of graduating from college is the new freedom. As my friends and I scattered across the country to start jobs, graduate school, and more, the opportunities to see so many new places seemed endless. So why not earn travel rewards on all these trips? Armed with new knowledge about credit cards, especially how travel credit cards work, I started looking around for my first travel credit card.

When choosing a travel card, I kept a few things in mind. I know I don’t have any brand loyalty to a particular airline, so co-branded credit cards aren’t on my list. I also know that while I have plans for the near future, I actually travel less frequently over time. My goal is a card with good short-term value (a simple sign-up bonus) where I can earn travel rewards on my everyday purchases, and there’s no annual fee. At the end of my search, I checked all of these boxes with the Capital One VentureOne Rewards credit card.

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I was approved quickly and earned my sign-up bonus with ease, thanks to a quick trip home from the holidays. During the first few months of my card, I went back to my alma mater several times, visited friends in California and New York City on consecutive weekends, attended a friend’s wedding in my hometown college, and traveled to mine more than once to have my own home.

Needless to say, I quickly built up huge balances, and I’m one of at least 60% of people with credit card debt for at least 12 months. Now that my travel frequency has leveled off as expected, I’m trying to pay off this balance as quickly as possible for a number of reasons.

How do I plan to pay off my travel card debt

With the likelihood of a recession increasing and interest rates continuing to rise, now is the perfect time to focus on paying off high-interest credit card debt. Also, as a recent graduate who has benefited greatly from the suspension of student loan repayments, the end of the program has made me take a hard look at my budget. One tool to help consumers pay off high-interest credit card debt is a balance transfer credit card.

This type of credit card allows consumers to transfer credit card balances from one account to another for a period of time at zero interest. You’ll also be charged a fee for completing the balance transfer (usually 3% or 5% of the transferred balance). The biggest advantage of a balance transfer card is that it saves you a little interest and gives you time to make a plan to eliminate as much debt as possible during your APR introduction. These are a few steps I’m taking as I prepare to make a balance transfer.

1. Pay as much of your current card balance as possible

When I complete my balance transfer, I want to transfer as little balance as possible. The lower the transfer balance, the lower the added balance transfer fee. Also, by making fewer transfers, I can pay my balance faster and can improve my credit score by reducing my credit utilization. I plan to pay as much as I can before the transfer is well above the minimum payment on my travel credit card.

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2. Establish a repayment game plan

It’s good to know some key details to get a balance transfer card, such as how long it will take you to get your balance back to zero before the card’s introductory APR period ends. Budget how much debt you’re going to pay each month, and start putting some of that money aside before you start moving. Also, don’t forget to factor in the card’s balance transfer fees and set aside funds to cover additional fees.

3. Compare Balance Transfer Cards

Once you have a repayment plan in place, shop around for the best balance transfer card to achieve your goals. Some cards will have different introductory APR period lengths, balance transfer fees, and ongoing APRs, which you need to be aware of if you end up with a balance after the introductory period ends. Choose a card that best fits your personal repayment schedule to maximize its value.

The best balance transfer card I’m considering

While I’m not ready to transfer my balance, there are some balance transfer cards I’m highly considering when. To me, three main characteristics make up the best balance transfer card: longest introductory APR period available, introductory APR period for purchases, and no ongoing rewards program.

Citi Diamond Preferred Card: Best for Excellent Credit

The Citi® Diamond Preferred® Card has one of the longest balance transfer introductory APR offers, with a 21-month APR of zero (then a 15.99% to 26.74% change). You can get approved with good credit (FICO score of 670 and above), and since there is no rewards program, you’ll be able to focus on your repayments without the distraction of trying to get your rewards. The current APR is also on the lower end of the spectrum compared to the current average credit card rate, which can be a plus if you have a balance.

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BankAmericard Credit Card: Best for No Penalty APR

In addition to meeting all of my favorite credit card features (long APR intro for balance transfers, equally long APR intro on purchases, and no reward structure), the BankAmericard® Credit Card adds the added benefit of not being charged a penalty APR if you miss a payment . Note that missing payments can still negatively impact your credit. This card will give you a zero percent introductory APR on balance transfers and purchases for 21 billing cycles (then 14.99% to 24.99% variable.)

Citi Simplicity Card: Best for No Late Fees

Like BankAmericard, the Citi Simplicity® Card is both eligible and offers additional benefits. If you happen to pay late, this card doesn’t charge late fees, but you may still be subject to APR penalties and credit scores. The card has an introductory APR of zero percent on 21-month balance transfers (then a variable of 16.99% to 27.74%).

bottom line

During my graduate life, I learned a lot about my financial goals and the best ways to achieve them. I’m glad I made the leap and applied for my first travel credit card, and I’m glad I used it too. I feel confident knowing there are tools that can help me manage my debt effectively, so I can still live my life the way I want. You can say the same as long as you play your cards well.

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