What is a balance transfer and how does it work? (2023)

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If you're dealing with expensive credit card debt, a balance transfer can be a useful tool in your debt reduction strategy. A balance transfer is simply the process of moving high-interest debt from one or more credit cards to a lower-interest credit card.

A credit card with a good balance can help you pay off debt faster, since more of your payments each month go toward the card's principal balance rather than interest charges. It can also save you hundreds, if not thousands, of dollars in interest because the transferred balance will have a low or 0% APR for a limited time, typically six to 21 months.

(Video) Balance Transfer Cards 101: Everything You Need to Know

However, balance transfers are not free. Most issuers charge abalance transfer fee, and there are other factors to consider before applying for a low or zero percent interest credit card.

Here we explain how balance transfers work and give some tips to determine if this debt payment strategy is right for you.

How balance transfers work

When requesting a balance transfer from most major issuers, you generally need to follow these steps:

  1. Request a card.You can apply for a balance transfer card online in a matter of minutes. You have to look for a card with a0 percent APR introductory offertransfer balance, but must have good or excellent credit to qualify.
  2. Start the balance transfer.You need to know the account number of your existing balance and how much you want to transfer. Your new issuer may approve all or part of your balance transfer, depending on your credit limit and the issuer's transfer limits. Once the transfer is approved, issuers facilitate payment of the existing balance. Some issuers send the payment to the original creditor, while others require you to pay with aconsult balance transfer. Once the transfer is complete, you pay your new creditor.
  3. Wait for the transfer to complete.Balance transfers are not instant. Depending on the publisher and a host of other factors, yourbalance transfer can take anywhere from three days to six weekscomplete. And while your credit card company should be able to give you an idea of ​​how long it will take, there's no way to know ahead of time exactly how long you'll have to wait for the transfer. In the meantime, be sure to pay at least the minimum amount you owe to your existing creditors. Failure to do so can result in late fees, damaged credit, and even stopping your pending balance transfer.
  4. Balance balance.Once the transfer is complete, you can start paying off the balance on your new card. If you can pay off your balance during the 0 percent APR introductory period, every penny will go toward the balance you owe, since there's no interest.

What types of debt can be transferred?

Most people consider balance transfer cards when trying to pay off high-interest credit card debt. However, that's not the only type of debt you can transfer to a balance transfer card. Depending on the issuer, you may be able to transfer the following debts:

(Video) Balance Transfer Cards 101: Everything You Need to Know

  • credit card
  • auto loans
  • Personal loans
  • scholarships for students
  • Mortgage loans

How much debt can you transfer?

The amount of debt you can transfer from one account to another varies by issuer. Typically, your credit card company will consider your credit history and income, among other things.

There is no way to know for sure how much will be pre-approved. But it's important to note that you'll have to pay a balance transfer fee, typically 3 to 5 percent of the total amount transferred. If your approved credit limit is low, you may not be able to transfer your full balance.

How much money can you save with a balance transfer?

Balance transfers can help you save money when you transfer high-interest balances to a new card with a lower interest rate, but the amount of money you can save depends on several factors:

  • The interest you are currently paying on your balance
  • The amount you pay each month for that balance
  • The amount you want to pay each month for the balance after the transfer
  • Ongoing interest you pay after the promotional period ends (if you don't pay the transferred balance)
  • Any annual fees associated with owning the new card
  • The balance transfer fee, if applicable

How much can you save with a balance transfer? Let's look at an example where you currently owe $3,000 on a card with a 20 percent APR, are currently paying $200 per month, and don't expect any increase in APR or monthly payment.

(Video) What is a Balance Transfer Credit Card? (EXPLAINED)

If you were to transfer that debt to a card with an introductory offer of 0 percent APR for 15 months, no annual fee, and a 3 percent balance transfer fee (which works out to $90), you'd save about $392 over the period introductory .

Advantages and Disadvantages of a Balance Transfer


While the specific terms vary by credit card or issuer, there are two main benefits to a balance transfer:

  • You can avoid high interest charges.credit card APRare at an all-time high following the Federal Reserve's efforts to curb inflation in 2022. If you carry a credit card balance with an APR of 19 percent (the current national average) or higher, interest charges will accrue and your debt will soon feel insurmountable.
  • You can consolidate your debts.Transferring balances to a single low-interest credit card can not only save you money and help pay off debt, it can also simplify your financial life. If you carry large balances on several high-interest rate credit cards and find it difficult to keep your due dates and minimum payments correct, you may end upaccrue late fees. In that case, putting all your credit card debt on one card can be a good move, since you only need to keep track of one card and make one payment per month.


As mentioned above, balance transfers are not free. There are important terms and conditions that you should familiarize yourself with before applying for one. Some balance transfer drawbacks to consider include:

  • The costs are almost unavoidable.Balance transfers can be a great way to save interest and focus on paying down debt, but there are costs involved. You will almost always be charged a balance transfer fee, which is a percentage of the total amount you transfer.According to research by CreditCards.com,the most common balance transfer fee is 3 percent, but some cards charge 5 percent. For example, if your issuer charges a 3 percent balance transfer fee and you transfer $10,000 in debt from another card, $300 is immediately added to your transferred balance, bringing the total amount you owe to $10,300. There are somecredit cards without transfer fees, but the trade-off is usually a shorter 0 percent introductory APR period.
  • Balance transfer promotional APRs and transfer fees are due.A balance transfer card may woo you with its super low or 0 percent introductory APR offer, but don't be fooled. That "teaser rate" doesn't last forever. After a certain period of time, often six months to a year, sometimes longer, the interest will rise to the normal rate, which may even be higher than the rate you tried to avoid. You also don't want to waste time starting the balance transfer process. Some cards offer a lower transfer fee if you transfer the balance within a certain period of time. If you're not proactive, you could see your balance transfer fees increase, potentially costing you hundreds.
  • Multiple balance transfers can affect your credit score.you can thinkrequest a new balance transfer cardwhen your teaser rate is due is the perfect solution to avoid paying interest on your credit card debt. While you can, keep in mind that multiple card applications can affect your overall credit score. When you continue to open new accounts with low interest rates but maintain high debt, lenders may see you as a risk, making it difficult for you to borrow money for big-ticket items like a house or car—or even qualify for that second or third. balance transfer card deal.

Need to make a balance transfer?

A balance transfer can be a solid strategy for paying off debt, helping you save on interest and breaking down your balance over time. But it is not the best option for everyone. To make sure a balance transfer is right for you, consider the following:

(Video) What Is A Balance Transfer - The Complete Guide

  • How much do you have to transfer?As mentioned above, the credit limit offered may not cover the full balance you wish to transfer, even if you've been approved for a balance transfer card. If your balance is too large to transfer all at once, you'll need to decide whether to transfer part of it, apply for multiple cards, or work with your existing creditors to get a lower interest rate.
  • Do you have a payment plan?It is critical that you go into your balance transfer with a plan for how you will do it.pay your debtand take full advantage of a card's 0 percent introductory APR or low operating APR period. Otherwise, you could end up right where you started. Plus, if you don't pay on time, you could lose your 0 percent APR and even agood annual percentage rate.
  • What borrowed you?You may be motivated to pay off your debt, but if you haven't taken care of what got you into debt in the first place, you can use your new card to build an even bigger balance. Worse yet, you could be left with a high interest rate on your new card after the promotional period ends.
  • Good credit is required to qualify.To take advantage of the best balance transfer deals, you need good to excellent credit. instead of trying onebalance transfer with bad credit, consider a debt consolidation loan or focus on paying off your balance as much as possible before applying to rebuild your credit score and get better terms.

Tips for transferring balance

If you want to consolidate your debts, you could also save money by doing so. It is important to choose the right card that will help you minimize your costs. However, here are some other things to consider when completing a balance transfer:

  • Is there a 0 percent APR offer?If you can transfer your debt to a credit card with a 0 percent introductory APR offer, you'll pay off your debt interest-free. Keep in mind that the higher your debt, the longer you'll want the introductory offer to last.
  • Is there a balance transfer fee?Your balance transfer card will most likely incur a fee. And if your approved credit limit on your new balance transfer card is low, you may not be able to transfer your full balance.
  • Are there rewards?You won't earn rewards on your balance transfer, but some rewards cards come with introductory balance transfer offers. The most important thing to remember is that once you've paid off the debt you transferred to a credit card with a strong rewards program, you'll continue to see benefits on your everyday spending.

se reduce

Acredit card balance transferIt can be a useful tool to pay off debt faster without paying interest. But there are several things to consider to make a balance transfer work for you, including transfer fees and your financial habits.

Set up a payment plan before beginning a balance transfer to ensure that the balance is paid off before the end of the introductory APR period. Also, avoid adding to your credit card debt. Otherwise, the benefits of a balance transfer may be denied.

Editorial Disclaimer

Editorial content on this page is based solely on our writers' objective assessment and is not driven by ad dollars. It is not provided or mandated by credit card issuers. However, we may receive compensation when you click on links to our partners' products.

(Video) Should I Transfer My Credit Card Balance To A 0% Interest Account?

Jeanine SkowronskiHe is a credit card expert, analyst and multimedia journalist with more than 10 years of experience in business and personal finance. She previously served as head of content at Policygenius, executive editor at Credit.com, deputy editor at American Banker, reporter at TheStreet andcolumnistfor the magazine Inc.


What is a balance transfer and how does it work? ›

A balance transfer moves a balance from a credit card or loan to another credit card. Transferring balances with a higher annual percentage rate (APR) to a card with a lower APR can save you money on the interest you'll pay.

What is balance transfer and how does it work? ›

A balance transfer moves a balance from a credit card or loan to another credit card. Transferring balances with a higher annual percentage rate (APR) to a card with a lower APR can save you money on the interest you'll pay.

What is the catch to a balance transfer? ›

But there's a catch: If you transfer a balance and are still carrying a balance when the 0% intro APR period ends, you will have to start paying interest on the remaining balance. If you want to avoid this, make a plan to pay off your credit card balance during the no-interest intro period.

Why would someone do a balance transfer? ›

Credit card balance transfers are typically used by consumers who want to move the amount they owe to a credit card with a significantly lower promotional interest rate and better benefits, such as a rewards program to earn cash back or points for everyday spending.

How do you make a balance transfer work? ›

Let's take a look at how the balance transfer process works in four easy steps.
  1. Apply for a balance transfer card. You can apply for a balance transfer card online in a matter of minutes. ...
  2. Transfer the balance to the new credit card. ...
  3. Wait for the transfer to go through. ...
  4. Pay off your balance.
May 9, 2023

Is it a good idea to do a balance transfer? ›

A balance transfer credit card is an excellent way to refinance existing credit card debt, especially since credit card interest rates can go as high as 30%. By transferring your balance to a card with a 0% intro APR, you can quickly dodge mounting interest costs and give yourself repayment flexibility.

Can I still use my credit card after a balance transfer? ›

You may continue using the card as before even if you've paid the entire balance. Closing the account might have a negative effect on your creditworthiness.

Does it hurt my credit to transfer a balance? ›

Balance transfers won't hurt your credit score directly, but applying for a new card could affect your credit in both good and bad ways. As the cornerstone of a debt-reduction plan, a balance transfer can be a very smart move in the long-term.

What are the pros and cons of balance transfers? ›

The pros of balance transfers include saving money on interest, consolidating debt, and possible improvement in credit score in the long run. The cons of balance transfers include balance transfer fees, high regular APRs, and above-average score requirements.

Does a balance transfer go to your bank account? ›

You can even conduct a bank balance transfer, where you request a balance transfer with a credit card, but instead of paying off another card's balance, the funds go to your bank account.

Can a balance transfer be denied? ›

If you attempt to transfer a balance from one credit card to another card from the same card issuer, your balance transfer will likely be denied. Most issuers have restrictions on transferring balances between accounts.

What are the disadvantages of credit transfer? ›

Possible drop in credit score: A balance transfer might hurt your credit score in two ways. If the new card comes with a lower credit limit than your existing card, and if you close your existing card's account after the transfer, you may expect your credit utilization ratio to rise.

What is a common fee for a balance transfer? ›

Balance transfer fees are typically 3 percent or 5 percent of the total balance you transfer to your new card. So, for every $10,000 in debt you move to a balance transfer credit card, you'll owe $300 or $500.

How long does a balance transfer take? ›

A balance transfer occurs when you move a balance from one credit card to another, and this process typically takes about five to seven days. But a word of warning: Some credit card issuers can take 14 or even 21 days to complete a balance transfer.

Do balance transfers always work? ›

A credit card balance transfer done strategically — say, by moving debt from a high-interest card to one with a long 0% APR promotion — can save you a bundle in interest charges. But it's not a cure-all for debt. Sometimes, it might even hurt more than help.

Can you pay yourself with balance transfer? ›

You can sometimes get around this by using a balance transfer check where you write a check to yourself, deposit it into a bank account, and can use that money to pay anything you want, even a balance on a credit card from the same bank.

How much will it cost in fees to transfer a 1000 balance to this card? ›

It costs $30 to $50 in fees to transfer a $1,000 balance to a credit card, in most cases, as balance transfer fees on credit cards usually equal 3% to 5% of the amount transferred. Some credit cards even have no balance transfer fee, but it's rare for cards that do this to also have a 0% introductory APR on transfers.

Does a balance transfer count as a monthly payment? ›

Yes! Once your balance transfer is complete, your old credit card company will process it as a normal payment. This will satisfy your minimum monthly payment requirements so you can avoid late fees and potentially negative information on your credit report.

What happens after you do a balance transfer? ›

After you complete your balance transfer, your primary goal should be to pay off the transferred balance before the introductory offer ends. You can also use this time to master your budget, monitor the progress of your credit score and get serious about using your credit cards strategically going forward.

What is a 5 24 rule? ›

The Chase 5/24 rule is an unofficial policy that applies to Chase credit card applications. Simply put, if you've opened five or more new credit card accounts with any bank in the past 24 months, you will not likely be approved for a new Chase card.

Is it better to cancel unused credit cards or keep them? ›

Canceling a credit card can shorten the average age of all accounts, which can negatively affect your score. If your score has already dropped due to other negative items, such as late payments or large debt balances, it's probably best to keep the account open instead of closing it.

Why did my credit score drop after balance transfer? ›

When you apply for a new credit card, the issuer performs a hard inquiry into your credit history. A hard inquiry can temporarily decrease your credit scores. However, opening a new card can also improve your credit utilization rate, which is the amount of credit you use compared to the total credit available to you.

What is a good credit score? ›

Although ranges vary depending on the credit scoring model, generally credit scores from 580 to 669 are considered fair; 670 to 739 are considered good; 740 to 799 are considered very good; and 800 and up are considered excellent.

Is it bad to have a lot of credit cards with zero balance? ›

It is not bad to have a lot of credit cards with zero balance because positive information will appear on your credit reports each month since all of the accounts are current. Having credit cards with zero balance also results in a low credit utilization ratio, which is good for your credit score, too.

What are the dangers in accepting a balance transfer rate? ›

You could end up with a higher interest rate after the promotion. You may not save money after the balance transfer fee is added. Your credit score could be impacted. You risk creating more debt.

How many times can you do a balance transfer? ›

Can you do multiple balance transfers? Yes, you can do multiple balance transfers. Multiple transfers might be possible from several cards to one card or even several cards to several cards.

How many credit cards is too many to have open? ›

It's generally recommended that you have two to three credit card accounts at a time, in addition to other types of credit. Remember that your total available credit and your debt to credit ratio can impact your credit scores. If you have more than three credit cards, it may be hard to keep track of monthly payments.

Can you withdraw cash from a balance transfer credit card? ›

You'll need to ask the lender to transfer the money to your chosen account for it to count – you can't just withdraw it as cash and pay it in (doing so usually incurs expensive interest and fees).

Does a balance transfer have to be in your name? ›

The balance doesn't have to be in the consumer's name to qualify for a transfer, so if someone's new spouse has a high-interest credit card balance and they have excellent credit, a 0% APR balance transfer offer can pay off an old balance and help a couple start over together with lower debts.

How do I know if my balance transfer was approved? ›

We recommend checking every couple of days to see if the original card issuer has received the funds. You'll typically see it reflected on your account just like a normal credit card payment.

Which is safer bank transfer or credit card? ›

If you transfer money to a fraudster, you have no legal right to get your money back from your bank. Using a credit or debit card can provide you with more protection.

Can I pay a credit card with a credit card? ›

Suppose you have high-interest balances on one or multiple credit cards and you're looking to consolidate at a lower APR. You might be asking yourself, "Can you pay off a credit card with another credit card?" In short — yes, you can pay a credit card off with another credit card, there's more than one way to do it.

Is it worth transferring to 0% credit card? ›

Transferring your balance can be a really good way to get on top of your debt because you can stop paying a high interest rate on an existing credit card and instead pay a low or 0% rate on your new balance transfer card. Be aware that you will usually have to pay a fee of up to 3% of the balance you wish to move.

What is a good APR for a credit card? ›

A good APR is around 16%, which is the current average for credit cards. People with bad credit may only have options for higher APR credit cards. Some people with good credit may find cards with APR as low as 12%. A good starting point is looking for credit cards with 0% interest intro periods of up to 21 months.

Is 3% balance transfer fee worth it? ›

Is a 3% balance transfer fee worth it? Yes, a 3% balance transfer fee is worth it as long as the card's balance transfer APR saves you more money on interest charges. The combination of a 0% introductory APR and a 3% balance transfer fee is usually cheaper than allowing interest to accrue at your card's regular APR.

What is an example of a balance transfer? ›

Example of a Balance Transfer Fee

Suppose a credit card issuer offers you a promotional interest rate of 2% for an introductory period of 12 months, with a balance transfer fee of 1%. If you take that deal, the total cost of moving the entire $10,000 is $300 (the transfer fee of $100 plus interest payments of $200).

Does a balance transfer cancel your card? ›

However, it's important to understand that transferring a balance to a new credit card will not close the account of the original card — the balance will simply revert back to zero.

Can you pay for things on a balance transfer credit card? ›

Yes, you can use a balance transfer card for purchases — but spending may incur interest so check if this is the case. If you need to spend, as well as transfer existing debts, look for a credit card offering 0% on both balance transfers and purchases. They are usually referred to as “all-round” cards.

Will doing a balance transfer hurt my credit score? ›

In some cases, a balance transfer can positively impact your credit scores and help you pay less interest on your debts in the long run. However, repeatedly opening new credit cards and transferring balances to them can damage your credit scores in the long run.

Should I do a balance transfer or just pay it off? ›

But in general, a balance transfer is the most valuable choice if you need months to pay off high-interest debt and have good enough credit to qualify for a card with a 0% introductory APR on balance transfers. Such a card could save you plenty on interest, giving you an edge when paying off your balances.

What is the disadvantage of credit transfer? ›

  • You could end up with a higher interest rate after the promotion.
  • You may not save money after the balance transfer fee is added.
  • Your credit score could be impacted.
  • You risk creating more debt.
Mar 24, 2022

Do you lose points if you transfer balance? ›

If you're considering transferring a balance from a rewards card, you might be worried about losing your rewards points. However, balance transfers are generally treated as a payment from your new creditor (the balance transfer card) to your old card. The good news is, you won't lose any rewards earned.

What is a typical balance transfer fee? ›

Balance transfer fees are typically 3 percent or 5 percent of the total balance you transfer to your new card. So, for every $10,000 in debt you move to a balance transfer credit card, you'll owe $300 or $500.

How much is too much for a balance transfer? ›

Credit card providers typically determine the amount of debt you can move in relation to your credit limit. Many issuers are generous, giving cardholders the ability to transfer their full credit limit, but in some cases, your transfer limit may be capped at 75 percent of your overall credit limit.

How fast do balance transfers work? ›

A balance transfer occurs when you move a balance from one credit card to another, and this process typically takes about five to seven days. But a word of warning: Some credit card issuers can take 14 or even 21 days to complete a balance transfer.

How long does it take to pay off a balance transfer? ›

A balance transfer can take anywhere from a few days to several weeks, depending on the credit card company, but they're typically done within five to seven days. Knowing what to expect can help you ensure that you stay caught up on payments.

Can you cash out a balance transfer? ›

The process works by transferring money from one account to another and offering a low interest rate as a reward to you. You generally receive a credit card that allows you to charge things or receive cash. You may wonder if there are advantages and disadvantages to balance transfers. The answer is yes.


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