At a Glance

If you’re carrying a high-interest credit card balance, a balance transfer can be an effective strategy to save money and consolidate your debt. Understanding how a credit card balance transfer works can help you make informed financial decisions. Let’s dive into the details of balance transfers, including the process, the potential impact on your credit, pros and cons, factors to consider before initiating a transfer, and tips to maximize savings.

In this article, you’ll learn:


3% to 5%

The average fee for completing a balance transfer.

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A credit card balance transfer involves moving the outstanding balance from one credit card to another, typically with a lower interest rate. By transferring your balance to a card with a promotional 0% APR (Annual Percentage Rate) or a lower interest rate, you can save on interest charges and pay off your debt faster.

How does a balance transfer work?

The process of a credit card balance transfer generally involves the following steps:

1. Apply for a card

First, you must find a credit card offering a balance transfer option. Research different cards and choose the one that suits your needs regarding promotional rates, fees, and rewards.

2. Wait for approval

After submitting your application, the credit card issuer will review your information and determine whether you qualify for the new card. You’ll receive the new card and details on proceeding with the balance transfer if approved.

3. Initiate balance transfer

Once you’ve selected a suitable card, you must provide the necessary information to initiate the balance transfer. This typically includes the account details of the card you wish to transfer the balance from and the amount you want to transfer.

4. Pay the balance

Once the balance transfer is complete, the outstanding balance from your previous card will be transferred to the new card. It’s important to continue making payments on your old card until confirmation that the transfer is successful. After the transfer, you’ll need to make regular payments on the new card according to the terms and conditions.

Does balance transfer hurt your credit?

A balance transfer itself does not directly hurt your credit. However, certain actions associated with a balance transfer can have an impact. For example, applying for a new credit card will result in a hard inquiry on your credit report, which can temporarily lower your credit score. Additionally, closing your old credit card account after the transfer can affect your credit utilization ratio, which is an important factor in calculating your credit score. Considering these potential effects and managing your credit responsibly during and after the balance transfer process is essential.

Pros and cons of credit card balance transfer

Before deciding to initiate a balance transfer, it’s crucial to weigh the pros and cons. Here’s a table summarizing the advantages and disadvantages:

Pros Cons
Potential savings on interest Balance transfer fees
Debt consolidation Temporary impact on credit score
Simplified payment management New card application process
Opportunity to pay off debt Risk of accumulating new debt

What to consider before completing a balance transfer?

Before proceeding with a balance transfer, several factors should be considered.

1. Credit score requirements

Credit card issuers typically require a good to excellent credit score (usually above 670) to qualify for a balance transfer card. It’s essential to check the card’s eligibility criteria and determine if your credit score meets the requirements.

2. Balance transfer limit

Credit cards may impose a maximum limit on the amount you can transfer. Ensure that the limit is sufficient to accommodate your existing balance.

3. Effect on credit score

As mentioned earlier, a balance transfer can affect your credit score, mainly through new credit inquiries and changes to your credit utilization ratio. Consider the potential impact and evaluate if it aligns with your financial goals.

4. Transfer completion period

The time it takes to complete a balance transfer can vary depending on the card issuer. It’s crucial to understand the estimated duration and make necessary arrangements to avoid late payment penalties on your old card.

5. Calculate fees and saving

Evaluate the balance transfer fees charged by the card issuer. While some cards offer promotional 0% APR for a specified period, others may have low-interest rates. Calculate and compare the potential savings to the fees to ensure the transfer is financially beneficial.

How to complete a balance transfer?

To complete a balance transfer, follow these steps.

1. Choose the right card

Research various credit cards and compare their terms, interest rates, fees, and promotional offers. Select a card that aligns with your financial needs and goals.

2. Check the credit card limit and fees

Review the new card’s balance transfer limit to ensure it accommodates your desired transfer amount. Additionally, check for any balance transfer fees associated with the card.

3. Determine how much to transfer

Decide the amount you want to transfer from your old card to the new one. Take into consideration any fees and the credit limit on the new card.

4. Complete your transfer

Contact the new card issuer or initiate the balance transfer online by providing the details of your old card and the transfer amount. Follow the instructions provided by the issuer to complete the transfer.

5. Use the new card wisely

Once the transfer is complete, responsibly manage your new credit card by making regular payments and avoiding unnecessary spending. Aim to maximize savings by paying off the transferred balance before the promotional period ends.

Is balance transfer worth it?

Whether a balance transfer is worth it depends on your financial circumstances. A balance transfer can be beneficial if it helps you save on interest charges and pay off your debt faster. However, it’s essential to consider the associated fees, the impact on your credit, and your ability to manage credit responsibly. Evaluate the terms and conditions of the balance transfer card and assess if the potential benefits outweigh the costs in your specific situation.

Tips to save money on balance transfer

To maximize your savings during a balance transfer, consider the following tips:

1. Choose a card wisely

Thoroughly research and compare different balance transfer credit cards to find the one with the most favorable terms, low fees, and a suitable promotional offer.

2. Check the APRs before selecting a card

While a 0% APR promotional period is enticing, consider the interest rates that will apply after the promotional period ends. Look for cards with competitive ongoing APRs to ensure long-term savings.

3. Pay the debt monthly

Make regular monthly payments on the new card to avoid late fees and potential damage to your credit score. Create a budget and allocate funds toward paying off the transferred balance.

4. Keep your original account open

Keeping your old credit card account open after the balance transfer can help maintain a longer credit history, lower your credit utilization ratio, and positively impact your credit score.

5. Do not overspend

Avoid using the new card for additional purchases unless necessary. Focus on paying off the transferred balance and managing your finances responsibly.

6. Make a plan for your expenses

Develop a budget and financial plan to ensure you can comfortably meet the payment obligations on your new card. Monitor your spending habits and adjust as necessary to avoid falling back into debt.

7. Check your credit score from time to time

Regularly monitor your credit score to stay aware of any changes. This allows you to address discrepancies and track progress in improving your financial situation.

Alternative to balance transfer

If a balance transfer doesn’t seem suitable for your situation, consider exploring alternative debt consolidation options, such as:

1. Debt consolidation

Debt consolidation loans, home equity loans can help consolidate your debts into a single payment with potentially lower interest rates.

Related: What is Debt Consolidation

2. Debt avalanche

The debt avalanche method involves paying off debts with the highest interest rates first while making minimum payments on other debts.

3. Debt management plan

Working with a nonprofit credit counseling agency, you can create a debt management plan that includes negotiated interest rates and a structured repayment schedule.

Related: Pros and Cons of Debt Management Plan


Each credit card issuer may have different rules and guidelines regarding balance transfers. It’s important to review the terms and conditions of the specific card you’re considering.

Most balance transfer cards require a good to excellent credit score, typically above 670. However, credit score requirements can vary among issuers.

When you transfer a balance, the outstanding debt from your old credit card is moved to the new card. You’ll be responsible for making payments on the new card according to the terms and conditions.

Individuals with good to excellent credit scores, stable income, and a low debt-to-income ratio are more likely to qualify for a balance transfer card.

The decision to do a balance transfer or pay off your debt depends on various factors, including interest rates, fees, and your ability to manage credit responsibly. Evaluate your specific situation to determine the most suitable option.

Credit card balance transfer checks can be used to transfer balances, but they often come with fees and may not offer the same promotional rates as balance transfer credit cards. Consider the costs and benefits before using them.

If your new card’s credit limit isn’t sufficient to transfer all your credit card debt, you can transfer as much as possible and explore alternative debt consolidation options for the remaining balance.

The time it takes to complete a balance transfer varies depending on the card issuer and can range from a few days to weeks. Make payments on your old card until the transfer is confirmed.

After a balance transfer, your old credit card account remains open. You can keep it active or close it, depending on your preference. Remember that closing the old account may impact your credit utilization ratio and history length.