Determining which bank offers the best credit card balance transfer rate requires an understanding of how to define "best." Different consumers will define "best" differently based upon their personal needs and financial situation. Issues consider include balance transfer rate, how long it will last, default rate, and service fees.

Balance Transfer Rate

The first thing most people look for when shopping for lower credit card balance transfers is the rate. Some banks offer 0% APR on balance transfers, others offer an especially low rate, for example, 5% APR on balance transfers. At first blush, the 0% APR looks better, but other factors can complicate the situation.

Time

Credit Card One ("CCOne") may offer 0% APR on balance transfers for a period of two months. After that, the APR goes up to 18.9%. Credit Card Two (CCTwo) offers 5% APR on balance transfers for a period of six months. If the consumer keeps the account in good standing, the APR after six months goes up to 12.9%. In the above scenarios, CCOne is only a better deal if the debt can be paid off in two months. If the consumer needs a year to pay off the debt, then he or she will spend less money in the long run by transferring balances to CCTwo.

Fees and Costs

It is easy to forget the fact that almost all credit cards will charge a fee every time a balance is transferred, and that fee gets rolled into the balance and accrues interest at the same rate. Fees can be expensive; often they are something along the lines of "$30, or 3%, whichever is higher." Fees are per transfer, so if a consumer has five high-rate credit cards and transfers the balance to CCOne above, he or she will pay five fees. $30 x 5 = $150. On CCOne, that $150 starts accruing interest at the rate of 18.9% APR after two months. Sometimes, the fees alone cause a balance transfer to not be worth it. It is a good strategy to call the bank issuing the credit card and ask to have the balance transfer fees forgiven. Let them know that you will only transfer your balances if there are no fees.

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Beware Balance Transfer Offers