
Balance transfers can be a useful credit card tool for paying off higher-interest debt.

What is a balance transfer?
A balance transfer is moving a balance from one credit card or debt 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. Balance transfers can also simplify bills by consolidating multiple balances from different creditors onto one card with one payment.
Let’s say you have a $5,000 credit card balance on a card with a 15% APR. Transferring the balance to another card with a 0% APR offer and paying it off during the term of the offer can help you save hundreds of dollars in interest and pay off your credit card debt faster.
Should you do a balance transfer? 4 questions to consider
- When does the promotional period end? Introductory or promotional rates on new cards typically end between 9 and 21 months after they go into effect. To maximize your savings, determine how long the low rate lasts and how much more you can afford to pay before it ends. Make sure you’re current on your payments because missing a payment on time will likely result in your promotional rate being canceled and you’ll have to start paying interest based on the higher standard or APR on your account agreement.
- What are the initial fees? When transferring a balance to a credit card, you typically pay a transaction fee of 3% to 5% of the transferred amount. However, the long-term savings from the promotional rate can often offset the cost of this fee.
- What happens when the promotional rate expires? Once the introductory or promotional rate period ends, the contractual rate takes effect on any remaining unpaid balance. If you still have a balance at the end of the promotional period, going from a 0% interest rate to a higher rate in one month may increase your agreed-upon minimum payment. Be prepared for this and make adjustments to any type of automatic payment arrangement you have.
- What are the different APRs? Generally, balance transfers have one APR, while other transactions, such as purchases, cash advances, or checks, have their interest rates. It’s important to know all APRs and consider which type of transaction a promotional or introductory rate offer applies to (and which one you’re likely to use) when comparing offers.
How do you complete a balance transfer?
The process is not complicated, however, it helps to know in advance the steps to follow:
- View your current balances and the interest on each.
- For a new introductory credit card offer, many apps include the option to request a balance transfer right in the app. For balance transfer offers on a card you may already have, the lender will likely tell you the quickest and easiest way to request one. Many lenders allow you to view their offers and request a balance transfer in their mobile app or online banking.
- Look for a credit card to transfer your balance to with the right combination of low APR, low (or no) transfer fee, and long promotional period.
- Consider how much you will need to pay each month to pay off your balance before the introductory rate expires. This amount will typically be more than the minimum required monthly payment your creditor will charge you. Try using a balance transfer savings calculator to determine the correct payment amount.
- If approved, use online or mobile banking or call the customer service number on your new card to transfer the balance from your old card. You’ll need the full account number for each balance you plan to pay and any current balances, and sometimes you may also need to know the billing address for the payment to the creditor.
- Balance transfers can take a couple of days or up to two weeks when requested with a new credit card application, so it’s important to continue paying your creditors at least the minimum payment due until the balance transfer you requested for those accounts is reflected as a payment.
What else should you know?
Transferring a balance to reduce your interest charges can be a smart move, but it is only one of several strategies to reduce your debt.
Even if you don’t qualify for a low contractual or promotional APR, a balance transfer could still help. Combining debts can simplify your life and leave you with fewer bills to pay and fewer creditors to deal with. Depending on the size of your debt and whether you’ll need more time than the promotional period to pay it off, consolidating debt with a personal loan could be a better solution for your needs.
And remember: It’s wise to pay off high-interest debt. Balance transfers are a good option, but in the meantime, it’s important not to incur more debt.