Balance transfer vs. personal loan: What’s the difference?

Both balance transfer credit cards and personal loans can help you lower the interest rate on your high-interest debt and consolidate multiple payments into a single one, meaning you’ll have fewer bills to manage.

Credit cards that offer low introductory balance transfer APRs may be an appealing option. If you can move your existing balances to a low- or zero-APR balance transfer card — and pay off the debt before the introductory period ends — you might be able to avoid interest altogether and pay off your debt faster.

If you need a larger loan amount, or prefer to pay back what you borrow over a longer period of time, a personal loan may make more sense for your situation. This is especially true if you can get a personal loan at a lower interest rate than you’re paying on your existing debt. And if your credit has improved over time, your chances of qualifying for a better interest rate may have improved too.

Balance transfers vs. personal loan: Quick comparison

Four questions to ask when comparing a balance transfer and a personal loan

1. What type of debts do I have?

If you’re looking to consolidate different types of debt, a personal loan may offer more flexibility.

Personal loan: While lenders may place a few limitations on how you can use the money, you’ll either receive the funds directly into your bank account to pay off creditors yourself, or you may be able to have the lender do that for you.

Balance transfer: If your debt is mostly made up of credit card debt, a balance transfer might be the easy way to move debt from your existing cards to a credit card that’s offering a low introductory balance transfer APR. Just be aware that many card-issuing financial institutions require the debt to come from a card issued by a different company to be eligible.

2. How much debt do I have?

There’s no guarantee that a balance transfer card or personal loan will approve you for an amount that will cover all your current debts, until after you formally apply.

Personal loan: You might be able to get an estimate by applying for prequalification, which isn’t a guarantee, but it can give you an idea of whether you might be approved.

Balance transfer: Some credit cards have a minimum credit limit. But generally, you’ll need to formally apply and get approved to find out what your credit limit will be.

3. How much interest will I pay?

Personal loan: While lenders don’t generally offer a promotional interest rate period, interest rates may be lower than a credit card’s standard interest rate.

Balance transfer: If you can pay off the entire debt before the introductory balance transfer APR period ends, a balance transfer may be your least expensive option. After the promotional period expires though, any remaining balance will start to accrue at the card’s standard balance transfer APR, which will vary from card to card.

4. What fees will I need to watch out for?

Balance transfer: Cards usually charge a balance transfer fee of 3% to 5% of the amount transferred. One thing to keep in mind is that some balance transfer cards also charge an annual fee. Heads-up: With some balance transfer cards, you lose your promotional interest rate if you miss a payment, you pay less than your minimum payment, or you make even a single purchase on the card.

Personal loan: Lenders may charge you an origination fee, typically in the range of 1% to 8% of the amount borrowed. Although less common, there may also be an application fee or a prepayment penalty. Fees vary from one lender to the next, so comparison shopping is worthwhile.

Bottom line

You can use either a balance transfer credit card or personal loan to consolidate debts or lower the interest rate on your debt. Consider your circumstances, any potential fees associated with the method you selected, and which option will best align with your budget. Then, compare cards or lenders to find the option with the most-favorable terms for your situation.

A debit card gives you the convenience of paying for items directly from your checking account, without the hassle of writing a check or carrying cash.

You’ll often receive a debit card when you open a checking or spending account as a complimentary benefit of your account. But before you activate your card, ensure that your financial institution doesn’t charge a nominal fee to use a card. Once activated, you can use your debit card to make in-person and online purchases and withdraw cash at ATMs.

Debit cards are common and share some similarities with credit cards. Because the card is directly tied to your spending account and uses the cash you currently have, you want to be sure to keep it safe.

Let’s go over how to get a debit card, how to use it, what fees you might face and whether they’re secure.

• How to get a debit card
• How to use a debit card
• Do debit cards come with fees?
• Debit card vs. credit card: What’s the difference?
• Are debit cards secure?

How to get a debit card

A debit card is a physical card that’s directly linked to a checking or savings account at a bank or credit union. To get one issued, you’ll have to first open a checking account, which will require some personal information and, typically, a minimum deposit. Learn more about the different types of checking accounts and how to open one.

You’ll usually receive a debit card as part of your new checking account. Once you receive and activate your debit card, you can use it to access the money in your checking or savings account without having to visit a branch or log into your online account.

Where can I use my debit card?

Debit cards often have credit card network logos on them, like Visa or Mastercard. This means you can use them to do a variety of things, like …

• Buy things in stores and from online retailers
• Withdraw cash from your account using an ATM
• Get cash back when making a purchase at a participating retailer. If you buy $10 worth of goods at a drugstore and ask for $40 in cash back, the entire $50 will be withdrawn from your account and the cashier will hand you $40 in cash.

How to use a debit card

Debit cards can be easy to set up and use. Whether you’re opening an account in person or online, you’ll generally have to follow these steps.

1. Activate your card. Once you receive your card in the mail, activate it by logging into your online account or calling the financial institution. You’ll also need to sign the bank of the debit card.
2. Create a PIN. Debit cards have a personal identification number, usually four-digit numbers. You need to enter the PIN as a security measure before using your debit card at an ATM and with some purchases. If you’re able to choose your PIN, try to use a number that you can remember but isn’t easily associated with you.
3. Use your debit card to withdraw cash. If you need cash, you can use your debit card at an ATM or to get cash back during a purchase. Some banks and credit unions will charge you a fee to use an ATM that’s not part of their network. And ATM operators may charge you an additional fee.
4. Use your debit card to make purchases. You can use your debit card to buy things in stores and online. In stores, you may have the option to use your PIN or choose “credit” and sign for your purchase. The decision affects how the transaction gets routed behind the scenes, but either option will result in the money coming directly from your account.

Do debit cards come with fees?

While spending accounts may come with a separate fee schedule, there are some common debit card fees that you want to be aware of. Here are some of the most-common fees.

• Out-of-network ATM fee — Using your debit card at an ATM that isn’t part of your financial institution’s network typically results in a charge from your bank.
• Overdraft fee — If you’ve opted in to your bank’s overdraft program, you’ll likely be charged a fee if you overdraw your account.
• Foreign transaction fee — You might face a fee if you use your debit card to make a purchase while you’re outside of the U.S. or online in a foreign currency.
• Nonsufficient funds fee — If you signed up for a recurring bill with your debit card, you may have to pay an NSF fee if there isn’t enough money in your account to cover the transaction.
• Replacement card fee — Some financial institutions may charge you a fee to replace a lost debit card.

Debit card vs. credit card: What’s the difference?

Debit cards and credit cards look alike, but they have some fundamental differences. 

While you can use either type of card to make a purchase, when you pay with a debit card, you’re using the card to access money that’s in your account. The money is usually withdrawn immediately, with no bill to pay later. While not incurring debt can be great for your financial progress, your activity isn’t reported to the credit bureaus, and may not help your credit history.

When you choose to cover the purchase with a credit card, you have to pay back the credit card issuer at a later time — with interest. Since credit and interest are involved, your debt is then reported to the credit bureaus, which can help you build up your credit history.

Credit cards also have a credit limit — the maximum your balance can reach before the issuer can start to decline transactions. The limit on your debit card may depend on how much money you have in your account.

Prepaid debit cards

Some prepaid cards are referred to as prepaid debit cards. Unlike debit cards, prepaid cards aren’t directly linked to your individual bank account. Instead, you have to load money onto the prepaid card before you can use it. 

Are debit cards secure?

Your debit card comes with a PIN, which helps protect you when using your debit card for purchases and when withdrawing cash from your account. But keep in mind that because debit cards are directly linked to your account, they might not be as secure as credit cards.

If someone steals your debit card or account information, they can fraudulently use it to make purchases. And if they get your PIN, they could withdraw cash as well.

Federal law limits your responsibility for fraudulent charges if your debit card is lost or stolen, but the limit depends on how quickly you report the loss. Some financial institutions go beyond the federal regulations and offer zero-liability guarantees for all unauthorized transactions when your card is lost or stolen. 

If someone steals your account info while you still have the physical card, you won’t be responsible for any unauthorized transactions so long as you report the theft within 60 days of the bank sending your statement that includes the unauthorized transaction.

Next steps

Debit cards can give you freedom to pay for purchases with the equivalent of cash or check in a way that’s more convenient and potentially more secure than using cash. 

And unlike with a credit card, you don’t have to worry about high-interest debt.

But a debit card can come with fees, and you won’t necessarily build up any credit history by using it. Standard debit cards don’t offer many, if any, bells and whistles. If you’re looking to get more benefits out of your debit card experience, consider a rewards checking account, which might pay you an average percentage yield on the money you keep in your account.

Understanding credit score ranges is really important.

Knowing where you fall on a credit score range can be immensely helpful because it can give you an idea of whether you’ll qualify for a new loan or credit card. Your credit scores can also help determine the interest rates you’re offered — higher rates could add up to lots of money over time.

Understanding your credit scores

First off, you have more than one credit score, and there are a few reasons for that.

There are different scores for specific products. For example, there are special auto and home insurance credit scores. There are also different credit-scoring models, like FICO and VantageScore, which means you could have scores according to each model. Even the same model could give a different score depending on whether it uses data from your Equifax, Experian or TransUnion credit report.

Lastly, there are multiple consumer credit bureaus that provide credit reports on which scores are based. So depending on what information each bureau gets from individual lenders — and that can differ — the data used to compile your reports and build your scores could vary from bureau to bureau.

FICO and VantageScore Solutions create the most widely used consumer credit scores, and these companies update their scoring models from time to time.

VantageScore 3.0® credit score ranges

Here’s what the ranges look like for VantageScore 3.0.

FICO credit score ranges

FICO® 8 and 9 consumer score ranges

FICO industry-specific score ranges

What credit score ranges mean for you

Poor: 300 to low-600s

You might not be able to get approved for a loan or unsecured credit card at all. If a lender or issuer does approve an application, it likely won’t offer the best terms or lowest possible interest rate. If you’re looking for a credit card, you may have better luck with a secured credit card.

Fair to good: Low-600s to mid-700s

You’re more likely to get approved for financial products and may be able to shop around and compare options among different lenders. But you still might not get the best terms.

Very good and excellent/exceptional: Above mid-700s

A lender could deny an application for another reason, such as having a high debt-to-income ratio, but those with top credit scores likely won’t have their applications denied because of their credit scores. People in this score range are also most likely to get offered a low interest rate and may have the most options when it comes to choosing repayment periods or other terms.

What your credit score means depends on the model

As you can see, different credit-scoring models may have different ranges and scoring criteria. That means the same credit score could represent something different depending on which credit model a lender uses.

A VantageScore 3.0 score of 661 could put you in the good range for example, while a 661 FICO score may be considered fair.

And lenders create or use their own standards when making credit-based decisions. In other words, what one lender might consider “very good” another could consider “good.”

Even with all the variability, knowing where you generally fall on the credit score range can still be important. Your range could help you determine which financial products you’re eligible for and the terms a lender might offer you.

Bottom line

Ultimately, lenders may set their own credit ranges and criteria for approving an application. But if you know where you stand on a credit score range, you can make educated guesses about your financial profile.

What’s a credit card?

Credit and debit cards may look similar, but they work differently. With a debit card, when you make a purchase, the money comes right out of your checking account.

With a credit card, when you make a purchase, you’re borrowing money with a promise to repay it later. If you don’t repay the loan in full, you’ll have to start paying interest on the money you borrow.

If you do carry, or revolve, a balance — meaning you don’t pay off your balance in full by your due date — you’ll have to pay interest on the amount you revolve and your new purchases will start to accrue interest immediately (you won’t be within your grace period anymore).

Sometimes you might not be able to afford to pay the entire bill. When this happens, you can pay part of your balance and revolve the remainder.

Your statement will show your minimum payment amount, which is the amount you need to pay by the due date to avoid late charges. Late payments can also hurt your credit, so it’s important to always make at least minimum payments on time. It’s best to pay more than the minimum if you can afford it.

Types of credit cards

Secured cards

Secured credit cards can be a good option if you’re new to credit or had credit trouble in the past. When you open a secured card, you give the issuer a refundable security deposit that it can use to pay your bill if you don’t repay your balance for an extended period.

Retail cards

Retail credit cards — or store cards, as you might know them — are co-branded credit cards such as a Macy’s or Best Buy card. Retail cards may be easier to qualify for than other types of credit cards, but they also may have lower credit limits and higher interest rates. And sometimes you can only use the card at the associated retailer.

Rewards cards

Rewards credit cards give you rewards when you use the card to make a purchase. Depending on the program, you can redeem your rewards for a variety of things, including travel, merchandise, statement credits or a check.

Balance transfer cards

If you’re carrying a credit card balance, you may be able to save money by transferring that balance to a new credit card that has a lower interest rate. These are called balance transfer credit cards.

Zero percent cards

Some credit cards offer new cardholders a promotional 0% interest APR on purchases. The promotional periods often last between 12 and 21 months, giving you time to pay off a large purchase without accruing interest.

Important credit card charges and fees

Interest rates and charges

• APR for purchases — The APR you’ll pay when you carry a balance from purchases you made with the card.
• APR for balance transfers — The APR on balance transfers may be different than your purchase APR.
• APR for cash advances — You may be able to withdraw cash with a credit card, and the balance could have a separate APR.
• Penalty APR — A higher APR that can be applied to future balances if you make a late payment or your payment is returned.
• Grace period — How long you have between the end of your billing cycle and your due date.
• Minimum interest charges — The card issuer might have a minimum charge if you don’t pay off your balance in full.

Fees

• Annual fee — Some cards charge you an annual fee each year to keep the card.
• Balance transfer fee — The fee you pay when transferring a balance to your credit card.
• Cash advance — A fee you’ll pay to take out cash. It may be the greater of a percentage of the amount you take out or a specific dollar amount.
• Foreign transaction fee — Some cards have a foreign transaction fee, an extra few percentage points on top of your purchase amount if you buy something outside the U.S. or if it’s sold in a currency other than U.S. dollars.
• Late payment fee — The fee you’ll pay if you don’t make at least your minimum payment by the due date.
• Returned payment fee — The card issuer charges this fee if you tried to make a payment, but it’s returned.

What’s next?

Find a card that works for you

One person’s amazing credit card offer or rewards program could be a dud for someone else. Start by examining your spending habits, setting a goal for how you’ll use the card (perhaps for rewards or a major purchase) and then choose a card that fits your needs.

Monitor your credit

You can take steps to spot errors or signs of identity theft. Sign up for Credit Karma’s free credit monitoring, and you’ll get a notification if there’s a significant change in your Equifax® or TransUnion®credit reports — a potential indication that someone is trying to open an account in your name.

*Approval Odds are not a guarantee of approval. Credit Karma determines Approval Odds by comparing your credit profile to other Credit Karma members who were approved for the card shown, or whether you meet certain criteria determined by the lender. Of course, there’s no such thing as a sure thing, but knowing your Approval Odds may help you narrow down your choices. For example, you may not be approved because you don’t meet the lender’s “ability to pay standard” after they verify your income and employment; or, you already have the maximum number of accounts with that specific lender.

Although there are many credit-scoring models, the goal of these formulas is to figure out the likelihood of you paying your bill on time. And whether you’re looking at a FICO® or VantageScore®, your scores are based on the same information: the data in your credit reports. FICO® and VantageScore® place similar relative importance on five categories of information.

1. Most important: Payment history

Your payment history is one of the most important credit scoring factors and can have the biggest impact on your scores.

A long history of on-time payments is best for your credit scores, while missing a payment could hurt them. The effects of missing payments can also increase the longer a bill goes unpaid. So a 30-day late payment might have a lesser effect than a 60- or 90-day late payment. How much a late payment affects your credit can also vary depending on how much you owe.

If you’re having trouble making payments at all, you could also wind up with a public record, such as a foreclosure or tax lien, that ends up on your credit reports and can hurt your scores.

2. Very important: Credit usage

Credit usage is also an important factor, one of the few that you may be able to quickly change to improve (or hurt) your credit health.

Your utilization rate is the ratio between the total balance you owe and your total credit limit on all your revolving accounts. A lower utilization rate is better for your credit scores. Maxing out your credit cards or leaving part of your balance unpaid can hurt your scores by increasing your utilization rate.

Pay attention to not just your overall credit utilization, but also the utilization on individual credit cards.

3. Somewhat important: Length of credit history

A variety of factors related to the length of your credit history can affect your credit, including the following:

• The age of your oldest account
• The age of your newest account
• The average age of your accounts
• Whether you’ve used an account recently

Opening new accounts could lower your average age of accounts, which may hurt your scores. But the hit to your scores could also be offset by lowering your utilization rate and increasing your total credit limit. Closing an account could lower this factor and hurt your scores, once the account drops off your credit reports. The impact could be more significant if the account was also your oldest account.

4. Somewhat important: Credit mix and types

Having experience with different types of credit, like revolving credit card accounts and installment student loans, may help improve your credit health.

Since your credit mix is a minor factor, you probably shouldn’t take out a loan and pay interest just to add to your credit mix. But if you’ve only ever had installment loans, you may want to open a credit card and use it for minor expenses that you can afford to pay off each month.

5. Less important: Recent credit

Creditors may review your credit reports and scores when you apply to open a new line of credit. A record of this, known as a hard credit inquiry, can stay on your credit reports for up to two years, even if you don’t get approved for the credit card or loan.

Often a single hard inquiry will have a minor effect. Unless there are other negative marks, your scores could recover, or even rise, within a few months. The impact of a hard inquiry may be more significant if you’re new to credit. It can also be greater if you have many hard inquiries during a short period.

Bottom line

Consumer credit scores, which are determined based on the information in your consumer credit reports, weigh credit score factors similarly. If you focus on improving these factors, you could improve your credit health across the board.

When you need more clarity about how much money you’re earning versus spending, you’ll want to reference your monthly bank statement.

Knowing how to get a bank statement is important for anyone who has a bank account. You might receive one in the mail, maybe monthly or quarterly, unless you sign up for electronic statements instead. You can also typically review and download current and older statements from your online account. 

Other types of accounts also have statements, including investment accounts, credit cards, mortgages and auto loans. As with bank statements, you can often review copies online or request one by mail.

• What is a bank statement?
• How to get a bank statement online
• How to get a bank statement in the mail or in branch
• Why would I need a bank statement?
• How often can I get a bank statement?

What is a bank statement?

Bank statements are a record of all the credits and debits to your bank account during a specific period. The statement may show your bank account number, along with a list of transactions, including direct deposits, debit card purchases, withdrawals from ATMs and overdraft fees from that statement period. The bank statement may also show the account’s beginning and ending balance for the period. 

Many banks will assign monthly statement periods to their bank accounts and send you monthly statements. However, accounts that don’t see frequent transactions, such as a certificate of deposit accounts (or CDs) might see quarterly statements. 

Banks typically need to keep customer account records for deposit accounts (like checking and savings accounts) for at least five years. Some choose to retain records for longer, but you won’t necessarily find all your previous statements through your online banking platform. If you don’t see a bank statement you’re looking for through your online account, or you’ve closed your account and don’t have online access, you may still be able to request a physical or electronic copy (some banks may charge a fee for the document).

How to get a bank statement online

By default, banks may send your statements in the mail. However, many banks encourage customers to sign up for electronic statements instead. 

For instance, you might receive extra account benefits or monthly-maintenance-fee waivers if you opt in for e-statements. Plus, avoiding paper statements can help protect against mail thieves, and using less paper is good for the environment. 

Once you sign up for e-statements, the bank will likely send email notifications when your statement is ready online. The specifics will depend on your bank, but you can generally find historical statements for between two and seven years through your online account or your bank’s mobile app. You may also be able to download copies of PDF statements for your records.

Online and paper versions are generally identical, but there may be minor differences at some banks. For example, you might receive separate e-statements for all your accounts rather than a single consolidated paper statement. Still, both should show all the deposits and withdrawals from your account during the statement period. 

If you don’t sign up to receive e-statements, you may still be able to access your statements online. If you haven’t already created an online account though, you may need to do so first.

How to get a bank statement in the mail or in branch

If you need a paper copy of a bank statement, or a copy of an older statement that’s not available online, you may need to visit a bank branch or request the statement by mail.

Visiting a local bank branch could be the fastest option as you won’t need to wait for the mail. However, you may want to call the branch first to verify they can help. If it’s not convenient to visit a branch, you may be able to request a mailed copy online or by calling customer service. 

In either case, there may be a fee for requesting a physical copy of your bank statement, so be sure to ask before moving forward. 

Why would I need a bank statement?

There are several reasons you may need to get a bank account statement or a statement for one of your other accounts. Here are a few. 

1. Review your spending. Budgeting software can often connect to bank accounts and pull in your transactions for you to review. If you don’t use software though, you may want to review your bank statements periodically to better understand when and where you’ve spent money and compare against your budget. 
2. Look for fraud or errors. You also want to review your bank statements for signs of fraud and discrepancies, such as purchases you didn’t make or deposits for an incorrect amount. 
3. Apply for a loan. If you’re applying for a loan, such as a personal loan or mortgage, you may need to share copies of your bank statements. The lender will review them, along with other documents, to help determine whether you qualify for a loan and the rates it will offer. 
4. Review your account balance. You may want to review other account statements, such as a loan statement, to see your current balance and interest rate. Reviewing your loan statements can be helpful if you’re thinking about refinancing or consolidating debts, or preparing to start a debt payoff plan.  
5. Renting a home. Some landlord and property management companies may ask for copies of a bank statement to verify your income. Alternatively, you may be able to share pay stubs or tax forms. 

How often can I get a bank statement?

There’s typically no limit to how often you can download available statements or how many bank statements you can review online. However, there may be a fee each time you request a printed or mailed statement. 

Banks aren’t generally required to send you a monthly statement for your deposit account if there wasn’t an electronic transfer into or out of the account during the month. Many banks may still create a monthly statement for checking and savings automatically though. But you might only receive quarterly statements for other account types, such as CD or retirement accounts.

Bottom line

Your bank statements can offer a quick account summary of your account, and regularly reviewing your statements could help you stay on top of your personal finances. However, a better approach may be to use budgeting software that can automatically sync with your various bank accounts. 

Rather than having to log into your online banking account to download statements or review transactions, the budgeting software can quickly consolidate information from all your accounts. It may also offer insights into your spending habits, and it could be easier to use the software to search transactions or organize your records by transaction date or category.

Different types of banks and financial institutions offer products and services to meet the needs of individuals, families, businesses and large organizations.

Even a single type of bank might offer different types of bank accounts, including checking, savings and money market accounts. We’ll take a high-level look at some different types of banks in the U.S., along with a few types of financial institutions (such as credit unions) that offer similar financial services. Plus, we’ll explore how banks make money and what to consider before opening an account.

• What are some different types of banks?
• How do banks work?
• What to know about nonbank lenders
• Next steps: Choosing a type of bank that’s right for you

What are some different types of banks?

Banks may fall within a particular type depending on how the bank was created or chartered, what its focus is and who its target customers are. In general, “commercial bank” is a broad term for for-profit, FDIC-insured organizations that accept customer deposits and offer lending products — this is what most people think of as a bank.

From this broad term, banks (and financial institutions offering similar services) can be broken down into several smaller categories, including retail banks, savings and loan associations, community development banks and neobanks.

Retail banks

Retail banks, also known as consumer banks, are commercial banks that offer consumer and personal banking services to the general public. Most retail banks offer checking accounts, savings accounts and retirement accounts.

Consumer banking institutions may also offer different retail credit products to individuals and families, such as auto loans and credit cards. Institutions chartered as community, regional or national banks can all offer retail banking services directly to consumers.

Commercial banks

Some banks — or departments within banks — focus on serving corporate, nonprofit and government clients. These banks are often called business or commercial banks as a reference to their customer base. Often, commercial banks offer special financing and loan products for businesses, such as commercial real estate and equipment loans.

Community development banks

Community development banks, sometimes referred to as CD banks, are privately owned banks that focus on social responsibility and may receive support from the federal government. These banks are created to primarily help underserved communities with financial services, including access to deposit accounts and credit.

Investment banks

Instead of focusing on lending, investment banks make money through investing either their own money or a client’s money. For example, an investment bank may help clients with mergers and acquisitions, or help a private company go public through an initial public offering.

Online and neobanks

Many of the companies that you may think of as online banks — also called neobanks or virtual banks — aren’t actually banks. These tech-forward companies create attractive and easy-to-use interfaces for consumers and may offer a variety of perks. But they generally partner with a traditional bank that holds customers’ deposits and manages the behind-the-scenes finances.

There are a few exceptions, though — online banks are starting to get approved for national charters or purchasing small banks that already have a national charter. And traditional brick-and-mortar banks can offer online-only bank accounts or create online-only bank brands.

Credit unions

A credit union is a financial institution that’s cooperatively owned and run by its members. Like banks, these not-for-profit organizations also accept deposits and offer loans. But unlike banks, credit unions pass earnings on to members rather than shareholders.

You may find that credit unions offer fewer fees, lower interest rates on loans and higher rates on your savings. Membership is often limited to people who have a link to the credit union, such as living or working in a particular area.

Savings and loan associations

Savings and loan associations, also known as thrifts, are a type of financial institution that focuses on helping people become homeowners. Unlike banks, which are solely owned by shareholders, customers and shareholders can mutually own a thrift.

Historically, there were limitations on the types of products a thrift could offer. Today, you may find that thrifts and banks offer similar types of consumer accounts. But federal laws have traditionally limited the types of commercial accounts and business loans they may participate in. Today, there aren’t nearly as many thrifts as banks, partially due to their decline following the S&L crisis in the 1980s.

How do banks work?

In general, banks often work as a financial intermediary by indirectly connecting people who need a safe place to store their money with people who need to borrow money. As depositors trust their funds to banks or credit unions in various accounts, the financial institution will in turn make loans to individuals, families or businesses making major purchases, such as houses and cars.

Banks can attract customers by paying interest on the money kept at the bank, such as the funds in your savings account. And banks make most of their money from the interest and fees on the loans they issue.

What to know about nonbank lenders

There are some financial institutions that offer loans but don’t accept deposits and aren’t banks. Common examples include nonbank mortgage lenders and payday lenders. Online, you can also find consumer and small business loans from nonbank lenders and peer-to-peer lending platforms.

Working with a nonbank lender isn’t necessarily dangerous, as nonbank lenders are still subject to many state and federal lending laws. But if you’re unfamiliar with the company, you may want to look up reviews of the business. Some scammers pose as lenders to collect “fees.”

Next steps: Choosing a type of bank that’s right for you

In many cases, finding the right account depends less on the type of financial institution than the specific account’s services, features and fees.

For instance, if you’re looking for a high-yield savings account, you may want to focus on the account’s annual percentage yield, and whether there are activity or minimum balance requirements. If you can earn a lot of interest, it might not matter whether you’re storing your money at a bank or credit union.

But in general, you’ll want to make sure your account is insured by either the FDIC (for banks) or NCUA (for credit unions). The insurance covers up to $250,000 in deposits, which stands as a federal guarantee that you’ll receive your money if the bank or credit union goes under. For details, visit the FDIC’s FAQ page or see the NCUA informational booklet.

One of the many purposes of banks is to give people and businesses a way to store funds and access credit. But a lot of financial institutions also focus on profits and making money from the same customers they’re serving.

Understanding how banks make money can help you decide what to look for in a new bank.

• How do banks make money?
• How banks make money with interest
• How banks make money with fees
• How banks make money with interchange fees
• Other ways banks make money
• Next steps: Ways to reduce your banking costs

How do banks make money?

The ways that traditional banks make money can vary depending on the type of bank and its target customers.  

Community banks primarily make money from the interest they earn lending money to local residents and small businesses. The money comes from depositor funds held in several types of bank accounts. While many large banks also make most of their income from interest, they earn a larger share of their revenue from non-interest sources than community banks do.

Large banks are also often made up of different divisions that focus on various types of customers and services. For example, their commercial banking or retail banking divisions may offer traditional bank services, such as deposit accounts (like checking or savings) and issue personal and business loans. However, their investment banking divisions may help large corporate and government clients raise money, manage their money and invest the bank’s money.

How banks make money with interest

Many banks make the majority of their money from charging interest on loaned funds, such as home loans, auto loans or personal loans that are issued to consumers. Many banks also offer loans to small and large businesses. Customers who have a credit card and revolve a balance may also pay interest on their credit card debt.

How banks make money with fees

Banks can also make a lot of money on banking fees. These can range widely depending on the type of account or service you have with the bank, and may include …

• Bank account fees — Banks may charge you a monthly maintenance fee for having a checking or savings account. You may also have to pay fees to use bank-related services, such as withdrawing money from a non-bank ATM, to make transactions with your credit or debit card in countries outside the U.S. or to receive a money order or cashier’s check. There may also be account-related fees for bill payment services, or for overdrafts and nonsufficient funds in your account.
• Credit card fees — Cardholders may pay an annual fee to open and use the bank’s credit cards. Usage-based fees — for cash advances, balance transfers, late payments or exceeding the credit limit — are also common. In addition to late fees, making a payment 60 days or more after it’s due could lead to a penalty annual percentage rate (or APR).
• Loan and service fees — Banks may also collect fees when they issue loans or sell other financial products, such as an insurance policy. Some banks will issue loans and then sell the loan to another financial institution instead of collecting interest from the borrower. The bank may still make money on the loan origination fee and sale, or could collect fees to service the loan.
• Investment fees — Banks that offer investment services can also earn fees for managing clients’ investments and brokerage services (a fee each time you buy or sell a stock, for example). Banks that create or sell mutual funds, annuities and other financial products may also earn commissions or fees from these sales.

How banks make money with interchange fees

Banks can also make money whenever you use the bank’s debit card or credit card to make a purchase. Merchants pay what’s called a merchant discount fee when they accept a card. With cards that are issued by banks (such as Visa and Mastercard credit and debit cards), a portion of the discount fee goes to the issuing bank. This is called an interchange fee.

Some banks also offer merchant accounts to businesses that want to accept debit and credit cards. They can then collect merchant processing fees from the merchant on its card-based sales.

Other ways banks make money

Banks have other ways of earning non-interest income.

• Investments — In addition to earning fees and commissions on customers’ investments, banks may be able to invest their own money.
• Advisory services — Some banks also make money by acting as an adviser for other businesses. They may sell research or investment ideas to individuals and businesses. Entities may also hire the bank to help with raising money, public offerings, and mergers and acquisitions.
• Commissions — Banks may have partnerships with insurance agents, brokerages, investment services and other businesses that pay them a commission to refer customers.

Next steps: Ways to reduce your banking costs

While you may benefit from the services that banks offer, you can also look for ways to save money by minimizing your banking costs.

• Look for fee-free banking services. If you want a basic checking or savings account, look for banks that don’t have minimum balance or monthly service fee requirements. Remember, though, that even with a fee-free checking account, there can be other fees — including ATM fees charged by third-party providers.
• Don’t opt in for overdraft services. Accepting your bank or credit union’s overdraft services can lead to overdraft fees. Instead, aim to keep an eye on your balance and balance your checkbook regularly to avoid nonsufficient funds fees.
• Understand what you’re getting for your fees. Paying a fee for a service or product isn’t a bad idea if you feel the benefits outweigh the costs. For example, credit card annual fees may be worth it if benefits from perks and rewards make up for it. But there are also many rewards cards, including travel cards, that don’t have annual fees. 
• Beware of sales tactics. You may think of bank tellers as helpful customer service representatives. However, at some banks, they serve a dual function and are expected to act as salespeople as well. Tellers may try to get you to open other accounts at the bank to meet their sales quotas (remember the Wells Fargo fake account scandal). Banks can also earn commissions or collect fees when you buy investments or insurance products from the bank. If your financial adviser works for a bank, beware of the potential conflict of interest that may arise, particularly if your adviser works on commission.
• Comparison shop when applying for a loan. One of your biggest banking costs may be the fees and interest you pay on a loan, especially if you’re taking out an auto loan or mortgage. However, you can comparison shop when looking for a lender — you don’t have to borrow money from your current bank.

Shopping for a loan won’t necessarily hurt your credit, and you don’t need to accept a loan offer when you’re approved. Comparing offers from several lenders can help you find a loan with the lowest possible fees and interest rates. 

In general, the less you spend on banking fees or penalties, the more money you’ll have to pay off debt, build savings and invest for your future. While banks might also earn money by offering these services, you’ll both be benefitting in the long run.

What to know about the Ramp Corporate Card

It isn’t a small-business credit card

The Ramp Corporate Card and its platform are designed for small- to medium-sized businesses, but it’s not a traditional small-business credit card. To qualify for an account, you must have the following:

• A corporation or limited liability company (LLC) that’s registered in the U.S.
• At least $250,000 in a U.S. business bank account
• If you are an international company, most of your operations and corporate spending must be in the U.S., and you need to have a physical presence in the U.S.

As a charge card, the Ramp Corporate Card doesn’t allow you to revolve a balance — you must pay your balance in full each month. That means you won’t be able to use the card as a way to finance your business expenses.

But unlike many small-business credit cards, the Ramp Corporate Card doesn’t require a credit check or a personal guarantee. As a result, your personal credit and finances likely won’t be affected by using the card for your business.

You can earn rewards and save money

There are several ways that Ramp could help your business save money.

• 1.5% cash back on all eligible purchases — The flat-rate cash back rewards are easy to understand and use, though other corporate cards that offer bonus rates in certain categories may be more rewarding. Cash back can currently be redeemed as a statement credit.
• Partner rewards — Ramp partners with popular business service providers for discounts, credits and sign-up offers.
• Ramp Savings Insights — The Ramp platform automatically analyzes your business’s transactions to recommend ways to save money. For example, it may find duplicate subscription payments from different employees or lower-cost options for your SaaS services.

No card fees, but three subscription tiers

Many small-business cards come with a variety of fees to consider, like annual fees or extra costs for adding multiple employee cards to the same account. But Ramp has no card-related fees.

That doesn’t mean the Ramp Corporate Card is always free to use, though. In addition to being a corporate card with a cash back rewards program, Ramp aims to differentiate itself from competitors as a “spend management platform.”

When you use the Ramp platform, you’ll have access to three subscription options and one add-on feature.

• Essential plan (free) — The base-level plan includes the Ramp card and most of the platform’s features, like rewards and savings insights.
• Platform plan ($7 per user per month) — Upgrading to the Platform level unlocks category-specific spending controls, multi-step spending request approvals, Slack integration, vendor management and an audit trail.
• Enterprise (custom pricing) — The Enterprise plan adds a dedicated account manager, quarterly spending audits and a Ramp negotiator who will try to get you better deals with vendors.
• Add-on reimbursement feature ($5 per user per month) — Though not yet available to all users, this feature lets you manage employee reimbursements for expenses within the Ramp platform. The feature will eventually cost $5 per user in a billing period.

More details about the Ramp Corporate Card

Here’s some more info that could help you decide if the Ramp Corporate Card is right for your business.

• You get unlimited users and virtual cards. You can get up to one physical card per user for free, and an unlimited number of virtual cards.
• Your bank balance can affect card limits. Ramp considers your business’s liquid assets, debts, spending patterns and monthly needs to determine your overall spending limit. Based on that data, the limit might even change daily.
• The card has a 30-day billing cycle. As a charge card, you can’t revolve your Ramp Corporate Card’s account balance. Your account’s 30-day billing cycle begins with your first transaction, and then your balance is due in full every 30 days.

Who this card is good for

The Ramp Corporate Card and platform may be a good fit for small- and medium-sized companies that are looking for simple cash back or a handy way to improve their expense tracking and reimbursement systems.

It may be especially good if your business only needs the Essential tier of the Ramp platform, which can help you earn rewards and get unlimited employee cards without paying any fees. Switching to a higher subscription tier may make more sense as your business grows or becomes more complicated, but even the free plan includes many features meant to save your business time and money.

Paying off large amounts of medical debt can seem impossible. But with many medical bills, there’s no interest charged — so sticking with an original payment plan is often a better option than medical debt consolidation.

That said, the reality is that medical debt can be so draining that you can’t cover day-to-day expenses. And keeping track of numerous bills from different providers each month can be overwhelming. Medical debt consolidation could help address both of those issues if it allows you to combine all of your bills into a single, less expensive monthly payment.

But there are two reasons to avoid medical debt consolidation if you can.

One is that it typically adds interest or other costs to your monthly payments, making your debt even more expensive in the long run.

The other is your credit: When you consolidate medical debt by paying it off with a personal loan or a credit card, for example — you lose certain credit protections that apply only to medical debt.

You might still think medical debt consolidation is the only way to get immediate relief. Let’s look at how medical debt consolidation works, some options if you go that route — and other kinds of help to explore before deciding.

• How medical debt consolidation works
• Can medical debt consolidation affect your credit?
• Medical debt consolidation options
• Alternatives to medical debt consolidation

How medical debt consolidation works

As with other types of debt consolidation, medical bill consolidation involves taking out a new loan or line of credit to pay off your current debt. Those funds pay off the existing debt, and you then start paying off the new account.

When it comes to most kinds of debt, the goal of debt consolidation is to simplify your payments or pay less interest than on your current accounts.

But many types of medical debt don’t accrue interest at all, or they carry especially low interest rates. In these situations, consolidating the debt with an interest-accruing loan may wind up costing you more money overall — especially if you have to pay any fees to set up the new loan.

Consolidation may save you money, though, if your current bills are accruing considerable interest. You may find yourself in this position if you paid for medical procedures with a credit card, a loan, or a medical credit card with a deferred interest offer that you weren’t able to pay off before the special financing period ended.

Because medical debt consolidation can simplify your payments, you may be thinking about pursuing it even if it means paying more for your medical bills over time because of added interest. But it’s important to know there’s another trade-off to consider — and it involves your credit.

Can medical debt consolidation affect your credit?

If you’re on a payment plan from your healthcare provider for your medical bill, that debt generally won’t be reported to the three major consumer credit bureaus — Equifax, Experian and TransUnion. In that case, the debt wouldn’t affect your credit.

That doesn’t mean medical debt can never show up on your credit reports.

If you don’t pay your medical bills, then the account can be sent or sold to a collection agency eventually. The collection agency could report your unpaid debt to the bureaus, which can show up on your credit reports and stay there for up to seven years from when your account first went past due.

But with medical debt, you might catch some breaks before getting to that point.

The reality of expensive hospital stays, along with the delays that can come from dealing with health insurance providers, have prompted special treatment for medical bills, including …

• The major consumer credit bureaus have agreed not to include medical collection accounts on your credit reports until the account is at least 180 days past due.
• The credit bureaus will also remove medical collection accounts from your credit reports if your insurance company pays (or is in the process of paying) the bill.
• For veterans, certain medical debts can’t be reported to the bureaus until one year has passed since the procedure. Additionally, medical debt that was delinquent, charged off or sent to collection must be removed from your credit reports if it’s fully paid or settled.
• When they’re part of your credit history, medical collection accounts may have a lesser effect on certain credit scores than other types of collections accounts. But this isn’t an across-the-board rule.
• Some credit-scoring models will also ignore paid medical collections entirely when determining your score.

Medical debt consolidation may stop these credit protections

Most of the rules and laws listed above apply specifically to medical debt. So any medical procedures you initially paid for with a personal loan or credit card probably won’t receive the same protections. Instead, that debt will be classified as a loan or credit card debt.

The same concept applies to medical debt consolidation. If you consolidate your medical bills with a personal loan or transfer the debt to a credit card, your account may no longer be classified as a medical bill account because the debt will now exist in a loan or credit card account.

Those accounts are likely to report your activity to credit bureaus. As a result, making on-time payments could help you build credit. But you would also lose many of the consumer protections outlined above. And a late payment, default or collection account could show up on your credit reports and hurt your credit.

Medical debt consolidation options

Despite the risks, you might decide that medical debt consolidation still makes sense for you. In that case, you may have several options.

Keep in mind that the best choice for you could depend on your goals and budget, and that your credit health can also affect the loan amount and interest rates you receive.

0% intro APR balance transfer credit cards

Balance transfer credit cards with 0% introductory APR offers are typically used to consolidate credit card debt, and they’re a potential choice for consolidating medical debt if you originally paid your medical bills with a credit card.

Sometimes these offers include balance transfer checks, which allow you to pay off existing debt and then assume that amount as a balance on the new credit card. You may also be able to transfer money into your bank account, which you can then use to pay off your medical bills.

An introductory 0% APR can save you money on interest for as long as the intro period lasts — but balance transfers come with lots of risks. Watch out for balance transfer fees, which are often 3% to 5% of each transferred amount.

You’ll also want to develop a plan for paying off the balance in full before the promotional period ends, because the ongoing interest rate you’ll pay after the intro period ends could cost you a lot in the long run.

Personal loans

Depending on your credit, personal loans may have low interest rates and long repayment terms, which can translate into monthly payments that are more manageable than your original debt.

But keep in mind that interest starts to accrue once you receive the loan, and some lenders charge an origination fee on the loan amount.

Secured loans or lines of credit

You may also be able to use a secured debt, such as a home equity loan or home equity line of credit, to finance the payment of your medical bills.

While secured loans may offer lower rates and higher loan amounts than unsecured loans, the risks are too high to recommend it in all but the most serious cases.

Missing medical bill payments might hurt your credit and lead to collection efforts — but missing secured loan payments could lead to the loss of your home or other important possessions.

Alternatives to medical debt consolidation

For most people who didn’t originally pay with a credit card or loan, consolidating medical bills won’t be a great option. Medical bills often have low or no interest, and providers may work with you to find manageable payment plans. Also, special rules apply to unpaid medical bills that can limit their impact on your credit.

But if you’re feeling overwhelmed by the number of medical bills you have or can’t afford to pay them all, you may be able to get some relief without turning to debt consolidation.

• Negotiation — Reach out to your creditors and ask if they can work with you to offer a different repayment plan or lower your outstanding balance. You can also reach out to medical bill advocates, such as California Medical Billing Advocates (for Californians) or the Patient Advocate Foundation (nationally) — both nonprofits that offer free services. Just keep in mind that while some offer free or low-cost services, it’s not uncommon to find others that typically charge $100 an hour — or take a portion of what they save you — to negotiate on your behalf.  
• Credit counseling — Nonprofit credit counseling agencies offer debt management plans, which function like debt consolidation. You’ll make one monthly payment to the agency, which will then pay your creditors directly. If you have credit card debt, the agency may be able to include those accounts and negotiate fee waivers and lower interest rates.
• Bankruptcy — If you’ve exhausted all other options and you’re still struggling to pay your medical bills, a medical bankruptcy could be a last resort. But it isn’t a decision to take lightly. Filing for bankruptcy won’t help cover future expenses if you’re dealing with an ongoing medical condition, and it can have especially severe, long-lasting consequences for your personal finances and overall credit. A bankrupty can affect your ability to get a car, buy a home or even rent an apartment for up to 10 years depending on which chapter you file. If you think bankruptcy might an option for you, we advise doing extensive research first.

There’s little downside to signing up for a dining rewards program.

Whether dining out is a rare treat or the norm in your household, you can benefit from signing up for a dining rewards program. These programs offer rewards when you link an eligible credit card or debit card and then make a purchase at an in-network restaurant. You’d also still be able earn whatever rewards come with your credit card. And occasionally, you can find restaurants that are part of multiple dining-rewards programs.

• How do dining rewards programs work?
• Earn miles, points, rewards or cash back
• Use your favorite dining card

How do dining rewards programs work?

Dining rewards programs all work in a similar way. You create an account and link eligible credit or debit cards to your account. Then, when you use the linked card at an eligible restaurant, you’ll earn rewards through the program based on how much you spend.

Some programs may work only with cards that are part of a certain network, but some are open to credit cards from any major network. Gift cards, prepaid cards, FSA accounts and EBT cards might not work, even if they have the appropriate credit card network logo on them.

Some of these programs may offer introductory bonuses with minimum spend requirements for new members. But it’s often for a reasonable amount, such as spending $25 within 30 days.

Bonuses aside, you may want to focus on the one program that you’re most likely to use — and benefit from — rather than bounce around. With some rewards network programs, your earnings rate increases after you dine out a certain number of times in a year (and opt in for emails).

Earn miles, points, rewards or cash back

Here’s an overview of the many dining rewards programs that are available and which company powers each of them.

Frequent-flyer programs

You can earn frequent flyer miles from dining out through one of these programs.

• Alaska Mileage Plan Dining (Rewards Network)
• American Airlines AAdvantage Dining (Rewards Network)
• Free Spirit Dining (Rewards Network)
• MileagePlus Dining (Rewards Network)
• SkyMiles Dining (Rewards Network)
• Southwest Rapid Rewards Dining (Rewards Network)
• TrueBlue Dining (Rewards Network)

Hotel loyalty programs

Hotel loyalty programs offer points which you can redeem for free hotel nights.

• Eat Around Town by Marriott Bonvoy (Rewards Network)
• Hilton Honors Dining (Rewards Network)
• IHG Rewards Club Dining (Rewards Network)

Other loyalty programs

These loyalty programs may offer you options to redeem your rewards for travel, merchandise or discounts.

• Caesars Rewards Dining (Rewards Network)
• Shell Fuel Rewards (Rewards Network)
• OpenTable Points (OpenTable)
• Seated (Seated)

Cash back programs

There are also programs that offer rewards that you can redeem for cash back or gift cards. Often, these get added to your account, and you’ll need to earn enough rewards to meet a specified threshold before cashing out.

How you redeem the rewards you earn can vary. If you use a bank or investment app, the money may be deposited into your account. Some other rewards sites, such as eScrip Dining, send your rewards to a charity or school of your choice.

Here are some other rewards programs we think are worth mentioning.

• Groupon+ (Groupon)
• Neighborhood Nosh (Rewards Network)
• Upromise Dining (Rewards Network)

Use your favorite dining card

While you can link debit cards to a dining rewards program, you should consider using a dining rewards credit card. If you regularly eat out (or order in), these cards offer bonus rewards on dining that can quickly add up, especially when you stack them on top of a separate dining rewards program.

For example, the Capital One Savor Cash Rewards Credit Card offers a 3% cash back rate on eligible dining, entertainment and streaming service purchases. Plus, you get 3% cash back on qualifying grocery store purchases and 1% back on all other purchases.

The American Express® Gold Card could be another good pick, particularly if you like to travel. Using the card, you’ll earn four Membership Rewards® Points per $1 on dining purchases on the first $50,000 you spend on eligible purchases made at restaurants each calendar year (then one point per $1 after), and four points on the first $25,000 you spend on purchases at U.S. supermarkets each calendar year (then one point per $1 after). Plus, you’ll earn three points per $1 spent on airfare purchases from an airline or on amextravel.com, two points per $1 spent on prepaid hotels and other eligible purchases through amextravel.com, and one point per $1 spent on all other purchases.

The American Express® Gold Card’s $325 annual fee is somewhat offset by the travel and dining credits available to you as a cardholder. After adding the card to your Uber account and selecting it as the payment method, you’ll automatically get $10 each month in Uber Cash for Uber Eats orders or Uber rides in the U.S., up to $120 per year. And you’ll be eligible for a monthly statement credit of up to $10 for purchases at select merchants, including Grubhub, Goldbelly, The Cheesecake Factory and more. You can also redeem your points in a variety of ways (travel being one of the best options), or transfer them to a partner airline or hotel loyalty program.

What’s next?

As with all rewards programs, the difficult part is often balancing the desire to earn rewards with the temptation to buy things you otherwise wouldn’t.

It can be easy to justify dining out — everyone has to eat — but it’s also often more expensive than cooking at home. One of the reasons the above-mentioned cards stand out is that they reward grocery store purchases as well.

When it comes to the dining rewards programs, you can look to see if there are eligible restaurants that you already frequent or have wanted to try. There’s no harm in earning extra rewards — just try not to dine out (or go to restaurants you don’t like) simply to get a few points or miles.

Hear from our editors: The best balance transfer cards of January 2025

Updated December 20, 2024

This date may not reflect recent changes in individual terms.

Editorial Note: Intuit Credit Karma receives compensation from third-party advertisers, but that doesn’t affect our editors’ opinions. Our third-party advertisers don’t review, approve or endorse our editorial content. Information about financial products not offered on Credit Karma is collected independently. Our content is accurate to the best of our knowledge when posted.

Louis DeNicola is a personal finance writer and has written for American Express and Discover.

Written by: Louis DeNicola

Do you carry a balance on your credit cards? If you do, how much interest are you paying?

Rather than pay interest on your credit card debt or juggle multiple payments each month, you may be able to transfer high-interest debt to a single credit card by doing a balance transfer.

Here are our choices for the best balance transfer cards.

• Best for long 0% intro APR: U.S. Bank Visa® Platinum Card
• Best for people who might forget to pay back in time: Citi Simplicity® Card
• Best for time to transfer your balances: Citi® Diamond Preferred® Card
• Best for simple cash back: Citi Double Cash® Card

Best for long 0% intro APR: U.S. Bank Visa® Platinum Card

Here’s why: The U.S. Bank Visa® Platinum Card comes with a long intro APR offer for balance transfers that’s matched by an equally long intro APR for purchases.

The U.S. Bank Visa® Platinum Card offers an intro 0% APR for the first 18 billing cycles on purchases and on balance transfers completed in the first 60 days of your account opening. Once the 18 billing cycles are up, you’ll be charged a variable APR of 17.74% - 28.74% for each.

But the U.S. Bank Visa® Platinum Card charges a balance transfer fee: An introductory fee of either 3% of the amount of each transfer or $5 minimum, whichever is greater, for balances transferred within 60 days of account opening. After that, either 5% of the amount of each transfer or $5 minimum, whichever is greater.

Find out more about the U.S. Bank Visa® Platinum Card.

Best for people who might forget to pay back in time: Citi Simplicity® Card

Here’s why: The Citi Simplicity® Card combines low intro APR offers with no late fees or penalty APR if you pay late.

While it’s a good idea to pay on time, this can be a helpful safety net for busy people who are prone to forget their due dates from time to time. Keep in mind that even though this card doesn’t have late fees or a penalty APR, you may still have a late payment reported on your credit if you’re 30 days or more late on your payments.

You’ll also get an intro 0% APR on balance transfers for 21 months from the date of the first transfer, plus an intro 0% APR for purchases for 12 months from account opening (you may see different offers on Credit Karma). There are a few things to know before you apply for this card, though.

• Once those two introductory windows are up, you’ll be charged a variable APR of 18.49% - 29.24% on both purchases and balance transfers.
• To qualify for the low balance transfer rate, you must complete your transfers within four months of your account opening.
• You’ll be charged to transfer a balance. The Citi Simplicity® Card has a balance transfer fee: Intro fee 3% of each transfer ($5 minimum) completed within the first 4 months of account opening. After that, 5% of each transfer ($5 minimum).

Learn more about the Citi Simplicity® Card.

Best for time to transfer your balances: Citi® Diamond Preferred® Card

Here’s why: The no-frills Citi® Diamond Preferred® Card gives you more time to get all the paperwork in order for your balance transfers.

The Citi® Diamond Preferred® Card comes with a 0% intro APR on balance transfers for 21 months from the date of your first transfer for balance transfers completed within the first four months of your account opening.

At the same time, you’ll receive a 0% intro APR on purchases for the first 12 months after your account opens. After the intro APRs expire, you’ll be charged variable rates from 17.49% - 28.24% (note that your purchase APR and balance transfer APR may be different).

Keep in mind that there’s a balance transfer fee of 5% (minimum $5) per transfer.

Learn more about the Citi® Diamond Preferred® Card.

Best for simple cash back: Citi Double Cash® Card

Here’s why: The Citi Double Cash® Card has a good 2% cash back rate for when you want to start using the card for purchases: 1% cash back on every purchase, and another 1% cash back when you pay the bill for those purchases.

It also has an introductory 0% APR for 18 months from the date of the first transfer for balance transfers that are completed within four months of your account opening. But there’s a balance transfer fee: Intro fee 3% of each transfer ($5 minimum) completed within the first 4 months of account opening. After that, 5% of each transfer ($5 minimum). And once the intro 0% APR window is up, there’s a variable APR of 18.49% - 28.49% on balance transfers.

Also, there’s no promotional rate for purchases, and your purchase balance may start to accrue interest right away if you’re still paying off balance transfers (the card’s variable APR for purchases is 18.49% - 28.49%). We generally recommend not using the card for new purchases until you pay off your balance transfers.

Learn more about the Citi Double Cash® Card.

How to make the most of balance transfer cards

As with rewards cards and low-interest cards, it’s a good idea to compare balance transfer cards to determine which is best for your particular circumstances. If you don’t think you can pay off the debt quickly, a longer promotional period could be best. Or, you may want to try to save as much money as possible by avoiding balance transfer fees.

The right balance transfer card could help you save money while you pay down your debt, but even then it’s not a magic solution. Here are a few things you’ll want to watch out for, plus some tips for getting the most out of your card.

• Some balance transfer cards give you an introductory 0% interest rate on purchases, too, but this may not be the same length as the balance transfer intro period.
• You usually have to pay a fee to transfer your balance to your new card — typically 3% or 5% of your balance.
• Balance transfer cards may provide temporary relief from high interest rates, but they don’t make your debt disappear. If you’re approved for a transfer, you should make a plan for paying your debt down during the introductory APR period.
• A balance transfer calculator can help you estimate how much a particular balance transfer offer could save you.
• Depending on how much debt you’re carrying, you may not be able to transfer all of your debt, even if you’re approved for the card. How much you can transfer will probably be restricted to the credit limit you’re approved for. The card’s issuer may set a maximum transfer amount, too.
• You may need to have good or even excellent credit scores to qualify for a balance transfer card. If you’re still working on your overall credit, a card that can help you build credit may be a better fit for you.

As long as you’re aware of the potential pitfalls and have a plan, a balance transfer card could be a good option for you to help you consolidate and pay down debt.

How we picked these cards

We looked for cards that could help people who are currently in debt and plan to use a new balance transfer card to help them consolidate and pay down their debt. The length of the balance transfer introductory APR period and the balance transfer fee are two essential components, as a longer intro period and lower fees could help you pay off the balance before it starts to accrue interest.

We also considered other card fees, like annual fees, as these expenses could make it more difficult to pay off your debt. In fact, none of our picks for the best balance transfer cards charge an annual fee.

We didn’t consider sign-up bonuses, which can be more common with rewards cards than balance transfer cards.