A balance transfer moves debt from one credit card to another, usually one with a lower interest rate
A balance transfer is when you move an outstanding balance from one credit card to a different card, typically one offering a lower interest rate for a set period. The new card issuer pays off your old card's balance, and you then owe that amount to the new issuer instead. The goal is usually to reduce how much interest you pay while you work down the debt.
Balance transfers are not free. Most cards charge a balance transfer fee, typically 3% to 5% of the amount you transfer. Some cards offer 0% fees for transfers made within a certain window (often the first 60 days after opening the account), but this is less common. You pay this fee upfront, either added to your new balance or charged separately.
The real benefit comes from the introductory interest rate — often 0% APR for 6 to 21 months, depending on the card and offer. After that period ends, the regular APR kicks in. If you still carry a balance at that point, you'll pay interest at the card's standard rate, which can be 15% to 25% or higher.
Key Takeaways
- Balance transfer fees usually run 3% to 5% of the amount transferred, though some cards waive the fee for transfers made in the first 60 days.
- The introductory 0% APR period typically lasts 6 to 21 months; after it ends, the regular interest rate applies to any remaining balance.
- You must have a credit score in the good to excellent range (usually 670 or higher) to be considered for a balance transfer card with a strong offer.
- Your new card's credit limit may be lower than the full balance you want to transfer, so confirm the limit before applying.
- Paying down the balance during the 0% period is the only way to come out ahead; if you don't, the fee plus eventual interest can cost more than staying with your original card.
Who can get approved for a balance transfer card
Credit card issuers set their own approval standards, but most balance transfer cards require a credit score of at least 670, and many prefer 700 or higher. If your score is below 670, you may still find cards that accept balance transfers, but the introductory rates will be less attractive — perhaps 0% for only 6 months, or a higher regular APR after the intro period.
Issuers also look at your income, existing debt, and payment history. If you have missed payments in the past two years or carry very high balances relative to your income, approval becomes less likely. You can check your credit score for free through AnnualCreditReport.com, which is the only federally authorized source for free annual credit reports.
Even if you're approved, your credit limit on the new card may be lower than the total balance you want to transfer. For example, you might be approved for a $5,000 limit but want to transfer $8,000. In that case, you can only transfer $5,000 to the new card; the remaining $3,000 stays on your old card.
Steps to execute a balance transfer
Once you've chosen a card and been approved, the process typically works like this:
- Get your old card details ready. You'll need the account number, the exact balance you want to transfer, and the card issuer's name. Have your most recent statement handy.
- Initiate the transfer through the new card issuer. You can usually do this online, by phone, or through the card's mobile app. The new issuer will ask which card you're transferring from and how much to move.
- Confirm the transfer fee and timeline. The issuer will show you the fee amount and when the transfer will post. This usually takes 5 to 14 business days.
- Wait for the old balance to clear. Once the new card issuer pays off your old card, that account will show a zero balance. You can verify this by checking your old card's statement online.
- Stop using the old card. Close it or leave it open with a zero balance. Closing it immediately can hurt your credit score slightly, but leaving it open unused is often better for your credit mix and available credit.
- Make payments on the new card during the 0% period. Even though you're not paying interest, you still owe the balance. Payments made during the intro period reduce the principal you'll owe interest on after the period ends.
How to make the most of the 0% period
The introductory rate is only valuable if you use it to reduce your debt. Calculate how much you need to pay each month to clear the balance before the 0% period ends. If you transferred $5,000 and have 12 months at 0%, you'd need to pay roughly $417 per month to pay it off completely.
Set up automatic payments if possible, so you don't miss a due date. Missing even one payment can end your 0% rate immediately — most cards have a clause that cancels the promotional rate if you pay late. After that, the regular APR applies to your entire remaining balance.
Avoid transferring new purchases to the card during the intro period. Most cards apply the 0% rate only to transferred balances, not new charges. New purchases accrue interest at the regular rate right away, which defeats the purpose of the transfer.
When a balance transfer makes financial sense
A balance transfer saves you money only if the interest you avoid exceeds the transfer fee and any new interest you pay. Here's a simple example: if you transfer $3,000 at a 4% fee ($120), you've already spent $120. Your old card charges 20% APR; your new card offers 0% for 12 months. Over those 12 months, you'd have paid roughly $300 in interest on the old card. By transferring, you save $300 but paid $120 in fees, netting a $180 gain — but only if you pay off the full $3,000 before the 0% period ends.
A balance transfer makes less sense if you can't pay down the balance during the intro period, if your old card's interest rate is already very low, or if the transfer fee is high relative to your balance. It also doesn't help if you continue to carry balances on other cards or rack up new debt while paying down the transfer.
Balance transfers can also affect your credit score temporarily. Opening a new card creates a hard inquiry (a small, short-term dip) and lowers your average account age. However, if the transfer reduces your overall credit utilization — the percentage of available credit you're using — that can offset the damage over time.
What happens when the 0% period ends
When the introductory rate expires, the card's regular APR takes over. Any remaining balance will start accruing interest at that rate. If you haven't paid off the transfer by then, you'll owe interest on whatever is left.
Some people use a strategy called "stacking" — they transfer the remaining balance to another 0% card before the first period ends. This can work if you can find another card with a strong offer and you're approved. However, each transfer incurs a new fee, and issuers are increasingly aware of this tactic. Multiple balance transfers in a short time can hurt your credit score and make future approvals harder.
If you can't transfer again and can't pay off the balance, you're back where you started — paying interest on a credit card. The only difference is that you've paid transfer fees along the way, which means you've actually spent more money overall.
Balance transfers versus other debt-reduction options
Balance transfers are one tool, but not the only one. A personal loan from a bank or credit union often has a fixed interest rate (usually lower than credit card rates) and a set repayment term, which can make budgeting easier. However, personal loans have origination fees and require a credit check, similar to balance transfers.
A debt consolidation loan combines multiple debts into one payment, which can simplify your finances. The trade-off is that you may pay interest over a longer period, increasing total interest paid even if the rate is lower.
Debt management plans through a nonprofit credit counselor don't involve a new loan. Instead, the counselor negotiates with your creditors to lower interest rates and set up a repayment schedule. This doesn't hurt your credit as much as a balance transfer, but it does require you to stop using the cards involved.
If you're struggling with multiple high-interest debts and can't see a path to paying them off, speaking with a nonprofit credit counselor (through the National Foundation for Credit Counseling or a similar organization) is often a better first step than applying for new credit.
Frequently Asked Questions
Can I transfer a balance from one card to the same issuer?
Most issuers don't allow you to transfer a balance between their own cards. You can only transfer from a competitor's card. Check the card's terms before applying if this matters to you.
What if I can't pay off the balance before the 0% period ends?
The remaining balance will start accruing interest at the card's regular APR. You can try to transfer the remaining balance to another 0% card, but each transfer costs a fee and may be harder to get approved for if you've done multiple transfers recently.
Does a balance transfer hurt my credit score?
Yes, temporarily. Opening a new card creates a hard inquiry and lowers your average account age, both of which dip your score by a few points. However, if the transfer significantly reduces your overall credit utilization, that can improve your score over time and offset the initial damage.
Can I use a balance transfer to pay off a loan or medical debt?
No. Balance transfers only work between credit cards. You cannot use a balance transfer card to pay off personal loans, car loans, mortgages, or medical bills. You would need a personal loan or other financing for those debts.
What if the new card's credit limit is less than my full balance?
You can only transfer up to your approved credit limit. The amount over that limit stays on your old card. You can request a credit limit increase after a few months of on-time payments, which might allow you to transfer the rest later.