How credit card balance transfers work

profile Erin Bruehl  |  November 17, 2021

A credit card balance transfer is the practice of moving outstanding debt on one credit card to a newer card. This is done because a person might want to move the credit they owe to a credit card that has a lower promotional interest rate and better benefits, like a rewards program to get cash back or points for everyday spending activities.

For this reason, many banks and credit card companies waive the typical 5 percent balance transfer fee. Some institutions also offer a promotional period of up to 18 months of no interest on the transferred money.

Risks and Smart Use

Credit card balance transfers come with a downside. Transferring a balance means having a monthly balance, and even a monthly balance with no interest still requires you to make on-time payments on the transfer and for any new purchases you make on the new card.

Missing a payment might mean losing the introductory APR on the transferred balance, and it might void the grace period the institution offers. Some institutions add surprise interest charges on new purchases if you fail to make your minimum monthly payment.

Smart customers, on the other hand, can use the incentives they’re offered to avoid high interest rates while continuing to pay off their credit card debt. This is how people can use credit card balance transfers effectively.

How Credit Card Balance Transfers Work

In order to make use of a balance transfer, you’ll first have to apply for a card that has an introductory 0 percent APR on balance transfers, or use a 0 percent APR offer on a card that you already have. To be eligible for such an offer, you’ll typically need to have a very good credit score (at least 690).

Next, you’ll have to start the transfer. To do this, you should have the necessary information about the debt that you want to transfer; the information includes the issuer name, the amount of the debt, and other details about the account.Then, you’ll have to wait for the transfer to be processed. It can take up to two weeks for this to happen. When it is ready, the issuer will pay off your old account directly. The old balance, and the balance transfer fee, will then be reflected in your new account.

It is now your turn to pay down the balance. Once the balance is added to your new card, the responsibility is on you to continue making monthly payments on the account. You stand to save a lot of money if you pay the balance off during the introductory 0 percent APR period.

Should You Get a Balance Transfer Card?

Is a credit card balance transfer for you? It might be if you’re confident that you can pay off the balance in under three months. Balance transfers are a good choice if you need a lot of time to pay off high-interest debt and if you have good credit to qualify for a card that has a 0 percent introductory APR offer (specifically on balance transfers). Having such a card could save you a lot of money on interest, which is invaluable when it comes to paying off your balances.

But CNET cautions that balance transfers aren’t for everyone. Successfully paying off your debt in a few months might mean paying more in fees than you would in interest. If this happens, you might be better off just paying off your balance as soon as possible than transferring it to a card with lower interest fees.

Good Credit and Bad Debt

People who are easily tempted by credit cards should also be leery of balance transfer cards. Having a new card and siphoning credit away from an existing card might encourage some people to spend more on their credit instead of using balance transfer cards for their intended purpose.

As explained above, balance transfer cards are typically available to people who have exemplary credit. Banks and financial institutions are not likely to trust a second line of credit to someone who does not have a good credit score.

If you have substantial credit card debt, a credit card balance transfer may not be ideal for you because you might end up paying too much in transfer fees and interest. Instead, you might want to consider debt consolidation as a way of chipping away at what you owe.


Credit Card Balance Transfers: How They Work and if They're Worth It. (July 2021). CNET.

How a Balance Transfer Card Can Save You Hundreds of Dollars. (July 2021). CNBC.  

10 Things You Should Know About Credit Card Balance Transfers. AARP.

Do Balance Transfers Hurt Your Credit? (June 2021). TIME.

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