Balance Transfer Basics

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How to do a balance transfer in 5 steps

Transferring your existing credit card balance to a 0% APR credit card can help you pay off debt while avoiding interest


If you’re considering a balance transfer, start by checking your current balance and APR – and understanding the offer’s terms, conditions and fees. These tips will help you do a balance transfer successfully.

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Is your credit card debt piling up? Are you worried that high interest rates are causing that debt to grow faster than you can pay it down? A credit card balance transfer might be a solution.

When you conduct a balance transfer, you take the debt from one or more credit cards and transfer it to a different card. The goal is to move your debt from credit cards with high interest rates to one with a far lower rate. Ideally, you’ll transfer that debt to a card that offers 0% interest for a limited period.

1. Check your current balance and APR

Before starting a balance transfer, it’s important to understand the extent of your debt. Check your most credit card statements to determine your total debt, then look at your cards’ APRs.

APR, which stands for annual percentage rate, is the price you pay for borrowing money with your credit card. The APR and interest rate on credit cards are basically the same.

Maybe you have three credit cards, all with an APR of 18% or higher. It might make financial sense to transfer that debt to a credit card that offers either a lower APR or an introductory period in which it won’t charge you any interest on your existing debt.

To see how much money you could save with a top balance transfer card, use the balance transfer calculator.

2. Pick a balance transfer card that works for you

Choosing the right balance transfer credit card depends on several variables.

  • First is the new interest rate. Ideally, you’d want to transfer your high-interest-rate debt to a card that offers 0% interest on balance transfers for a limited time.
  • The introductory offers with some credit cards last longer. If you have a lot of debt, you might pick a balance transfer card with a 0% offer that lasts 18 months instead of the more common 12 months.
  • If you are transferring a lot of existing credit card debt, choose a balance transfer card with a high credit limit. This way, you can transfer more or all of your existing debt to it.
  • Look out for balance transfer fees. These are typically 3% to 5% of the transferred amount. However, there are several credit cards with no balance transfer fees.
  • Check out features that come with the card. Some will offer rewards points or cash-back bonuses that could be valuable if you plan on making new purchases. The debt you transfer to a new card, however, typically doesn’t earn rewards or cash-back bonuses.

Usually, consumers apply for a new credit card with an introductory interest rate of 0% on all new purchases and balance transfers. When applying, they also sign up for a balance transfer, providing information to the new card provider about their existing credit card debt. This means listing the credit cards from which they want to transfer their debt and the amount of debt they want to transfer.

Pro tip

Keep in mind that initiating a balance transfer can affect your credit score. Every time you apply for a new credit card, the provider of that card will check your credit. This is known as a hard inquiry, and each hard inquiry can cause your credit score to temporarily fall by five to 10 points, according to FICO. Fortunately, this is only a temporary hit. If you pay your bills on time each month and cut down on your existing credit card debt, your credit score should quickly recover from this small dip.

3. Understand the terms and conditions of your balance transfer

Rahkim Sabree, financial educator and author of “Financially Irresponsible,” recommends consumers always study the terms of a balance transfer offer before they initiate one. He said not understanding these could prove costly.

Some consumers might think that they always have at least 15 months to pay off the debt they’ve transferred before the 0% introductory offer expires. But that’s not always the case. Some cards might offer an introductory period of just six months. Consumers, then, might not put enough money toward their debt to pay it off before the 0% period ends, Sabree said.

Others forget about the costs associated with balance transfers.

Justin Zeidman, assistant vice president of open banking at Navy Federal Credit Union, said that these balance transfer fees can be costly. Assume that you are transferring $5,000 to a credit card that charges a transfer fee of 5%. The total amount for the transfer fee is $250.

“Depending on how much you are transferring, taking a balance transfer offer with a lower interest rate of 1.99% for 12 months might save you money over taking a 0% offer that comes with a 4% fee,” Zeidman said. “Consumers have to do the math on this,” he said.

4. Transfer your balance to the new card

If these requests are approved, the provider of the new credit card pays off the debt on the consumers’ existing cards. That debt is then charged on their new balance transfer  card.

As noted, most card providers will charge a fee, often in the range of 3% to 5% of the amount of money you’ve transferred. If you’re transferring $6,000 of credit card debt and the fee is 3%, you’ll pay $180 for that transfer, a figure that will be added to the balance of your new credit card.

Depending on the credit limit of your new card, you might not be able to transfer all your existing credit card debt. If your new card comes with a credit limit of $10,000 and you have $15,000 in credit card debt, you’ll only be able to transfer over a portion of your debt.

Finally, you won’t be able to transfer your debt between two cards issued by the same provider. For instance, you can’t close a balance transfer between a Citi® Double Cash Card and a Citi® Diamond Preferred® Card even though both cards offer balance transfer promotions.

5. Pay off your balance before the 0% APR period ends

While balance transfers can be useful tools for managing credit card debt, personal finance experts warn that consumers often misuse them.

The biggest mistake consumers make with balance transfers is not paying off the debt they transferred before the 0% introductory APR offer expires. Then, when their new credit card adjusts to its higher interest rate, their existing debt once again starts to grow quickly.

Others also make the mistake of adding new debt to the credit card they paid off with their balance transfer. Then, when the introductory offer expires, they’re left with a portion of their old debt and new debt, all at high interest rates. These cardholders are now in an even worse financial situation than they were in before they started their balance transfer.

“Now you are paying higher interest on the balance you transferred, and you are faced with new debt,” said Sabree. “You have to change your frame of mind when you do a balance transfer. You can no longer live beyond your means,” he said.

Fortunately, avoiding this mistake isn’t complicated. Zeidman said the best move consumers can make before starting a balance transfer is to create a household budget showing their monthly expenses and income. Once they’ve done this, they can determine exactly how much they can devote each month to paying down their credit card debt.

Zeidman recommends that consumers set up an automated monthly withdrawal from their checking accounts for this amount to make sure they pay down their transferred debt at a rate that they can afford.

“Budgeting is important. Autopay is important, too. It’s a way to keep you honest with your payments,” Zeidman said. “Set it and forget it, and then watch your credit card debt decrease month by month,” he said.

How to transfer a balance with the major credit card issuers

Balance transfer processes and policies may differ among major issuers. Read more to find out how each credit card company handles balance transfers.

Bottom line

Transferring your existing debt to a card with a 0% introductory interest rate gives you an opportunity to pay it off without worrying about interest for a limited time. If you do it properly, a balance transfer can help you take control of your credit card debt.

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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