How to Transfer a Credit Card Balance (and When It's Worth It)

Credit cards have some of the highest interest rates of any type of debt. With such high interest rates, if you can’t pay off your balance in full one month, it’s easy for your balance to get out of hand. That’s why many people consider credit card balance transfers.

So what is a balance transfer credit card? This is when you transfer what you owe on one credit card to another with a lower interest rate. The idea is that the new, lower interest rate will reduce your monthly credit card payments so they're more affordable and you’re in a better position to chip away at your debt. The process works for debt on a personal loan or business credit card.

People don’t just use credit card balance transfers to take advantage of lower interest rates. They can also help you move to a credit card with better terms or consolidate your credit card debt from multiple cards so you have fewer payments to manage.

To transfer a credit card balance, apply for a card with a 0% intro balance transfer APR, then give the new issuer your old card's account number and the amount you want to move. The new issuer pays off the old card, usually within 5 to 14 days, and adds a one-time fee of 3% to 5% of the amount moved. The 0% rate is a promotional rate with an end date, so the plan only works if you pay the balance down before it expires.

Pros and Cons of Balance Transfers: Are They Worth It?

If you’re wondering if you should transfer the balance on a credit card, it’s important to weigh the pros and cons before you commit.

How to Transfer a Credit Card Balance, Step by Step

Here's how a balance transfer works from start to finish. Most of the elapsed time is spent waiting, first for approval and then for the transfer to post.

How Much Does a Balance Transfer Cost?

The direct cost is the balance transfer fee, usually 3% to 5% of the amount you move. You don't pay it out of pocket: it's added to the new card's balance, so a $5,000 transfer with a 3% fee starts life as a $5,150 balance.

Whether the fee is worth paying depends on the interest you'd otherwise owe. The table assumes you pay the balance off in equal monthly payments over 15 months, either at a 0% intro rate on the new card or at a 24% APR on your current one.

So the fee on a $1,000 transfer runs $30 to $50, and the interest you avoid covers it within about three months. The math gets worse if you can't clear the balance before the promo ends, because whatever is left starts accruing interest at the card's regular rate. Our guide to how interest rates affect a balance transfer walks through that scenario, and it's worth taking a minute to calculate your card's interest on your current balance before you apply.

Does a Balance Transfer Hurt Your Credit Score?

A balance transfer can lower your score a little at first and then help it. Applying for the new card triggers a hard inquiry, which can shave a few points off for a while, and opening the account lowers the average age of your accounts.

The bigger effect usually runs the other way. A new credit line raises your total available credit, so your credit utilization ratio, the share of your limits you're using, tends to fall. Amounts owed make up about 30% of a FICO score, so that drop often outweighs the inquiry.

Keep the old card open once its balance is gone. Closing it removes its credit limit and pushes your utilization back up. If it charges an annual fee, ask the issuer about switching to a no-fee version before you cancel.

Tips To Maximize a Balance Transfer & Avoid Pitfalls

Completing a balance transfer can be a positive first step toward tackling your credit card debt, but there’s still more work to do. Try these tips to make the most progress with your debt during a balance transfer.

Pay Off Debt Before the Promotional Period Ends

The introductory rate on balance transfer cards won’t last forever. Once the promotional period ends, you’ll have a new, often much higher, interest rate to pay on your remaining debt.

Get around this issue by paying off your debt before the promotional period ends, or at least as much of it as possible. The less debt you have left when the new interest rate goes into effect, the better off you’ll be.

Avoid New Debt While Managing Existing Balances

Try to avoid adding to your debt balances while you’re tackling your existing credit card debt. Any additional purchases you charge to your card will just start racking up more interest fees, making it harder to clear your balance.

Should You Use a Balance Transfer To Pay Off Debt?

Balance transfers can help you consolidate debt and access lower interest rates, but they’re not all created equal. If you’re thinking about this option, review all the available cards to find the best one for your needs.

MoneyAtlas’s thorough comparisons of different credit cards based on interest rates, fees, and other terms can help. Explore credit card options to discover your ideal balance transfer card.

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