What a balance transfer is and when it makes sense
A balance transfer moves debt from one credit card to another, usually one with a lower interest rate. You contact the new card issuer, give them your old card details, and they pay off that balance for you. You then owe the new card company instead of the old one.
Balance transfers work best when you have high-interest debt on an existing card and can move it to a card offering a promotional rate — often 0% for 6 to 21 months, depending on the card and issuer. If you can pay down the balance during that period before the regular rate kicks in, you save money on interest. If you cannot, you may end up paying more than you would have on the original card.
The catch is that balance transfers are not free. Most cards charge a transfer fee of 3% to 5% of the amount you move. A $5,000 transfer at 4% costs $200 upfront. That fee gets added to your new balance, so you start out owing more than you did before.
Key Takeaways
- Balance transfers move your debt to a new card, usually to take advantage of a lower promotional rate, but you pay a transfer fee (typically 3% to 5%) that gets added to what you owe.
- The new card issuer pays off your old card directly, so you need your old card number and account details ready before you start the transfer request.
- Promotional rates expire — often after 6 to 21 months — and the regular rate then applies to any remaining balance, so you must have a plan to pay down the debt during the promotional period.
- You can transfer balances from multiple cards to one new card, but the total transfer amount cannot exceed your credit limit on the new card.
- A balance transfer does not close your old card, but carrying a zero balance on it may improve your credit score by lowering your overall credit utilization.
Step-by-step process for requesting a balance transfer
Start by choosing a card that offers a promotional rate low enough to justify the transfer fee. Compare the promotional period length, the regular rate that applies after, and the transfer fee percentage. A card with a 0% rate for 12 months and a 3% fee is usually better than one with 0% for 6 months and a 5% fee, assuming you need the time to pay down the balance.
Once you have chosen a card, apply for it. You do not need to be approved before you request a transfer — you can request one as soon as your account opens, though some issuers require you to wait a few days. When you are ready, log into your new card account online or call the customer service number on the back of the card.
Tell them you want to do a balance transfer. They will ask for the name of the old card issuer, your old account number, and the amount you want to transfer. You can transfer the full balance or a partial amount — transferring less means you pay a smaller fee, but you leave some debt on the old card at its higher rate. Provide your old card details accurately; errors can delay or block the transfer.
The new card issuer then contacts your old card company and arranges payment. The transfer usually posts within 5 to 14 business days, though some issuers are faster. During this time, keep making at least the minimum payment on your old card to avoid late fees. Once the transfer completes, your old card balance drops to zero (or to whatever amount you did not transfer), and your new card balance reflects the transferred amount plus the transfer fee.
Understanding promotional rates and what happens after
The promotional rate is temporary. It applies only to the balance you transferred, not to new purchases you make on the card. If you buy something new on the card after the transfer, that purchase usually starts accruing interest at the regular purchase rate immediately — not at the promotional rate. This is why many people use a transferred-balance card only to pay down debt, not to make new charges.
The promotional period has a fixed end date. After it expires, any remaining balance on the transferred amount switches to the card's regular interest rate. That rate varies by issuer and your creditworthiness, but it is often 15% to 25% or higher. If you still owe $2,000 when the promotional period ends, you will start paying interest on that $2,000 at the full rate.
Some cards offer a longer promotional period if you make a large transfer or if you have good credit. Others offer a shorter period. Read the card's terms carefully before you apply — the promotional rate and length are usually listed in the offer details or in the card's pricing and terms document.
Calculating whether a balance transfer saves you money
A balance transfer only saves money if the interest you avoid during the promotional period exceeds the transfer fee you pay upfront. Here is how to check:
Take the amount you want to transfer, multiply it by your old card's interest rate, and divide by 12 to get the monthly interest charge. Multiply that by the number of months in the promotional period. That is the interest you would pay on the old card during that time. Now subtract the transfer fee from that number. If the result is positive, the transfer saves you money — if it is negative, it costs you more.
Example: You have $5,000 on a card charging 20% interest. A new card offers 0% for 12 months with a 3% transfer fee. The fee is $150. On the old card, you would pay about $100 per month in interest ($5,000 × 0.20 ÷ 12), or $1,200 over 12 months. Subtracting the $150 fee, you save $1,050 — but only if you pay off the $5,000 before the promotional period ends. If you still owe $2,000 when the 12 months are up, you have saved less.
What to do with your old card after the transfer
Closing your old card after a balance transfer can hurt your credit score, even though the balance is now zero. Credit scores reward you for having available credit and for a long history with a card. Closing the card removes both of those benefits. Instead, leave the card open and unused, or use it occasionally for a small purchase you pay off immediately.
If the old card has an annual fee and you are not using it, you can call the issuer and ask them to waive the fee or downgrade you to a no-fee version of the card. Many issuers will do this to keep you as a customer. If they refuse and the fee is high, closing the card may be worth the small credit score hit.
Do not be tempted to run up a new balance on the old card while you are paying down the transferred balance on the new card. That defeats the purpose of the transfer and leaves you with debt on two cards instead of one.
Risks and common mistakes to avoid
The biggest mistake is not paying down the transferred balance before the promotional rate expires. If you transfer $5,000 at 0% for 12 months but only pay $2,000 during that year, you will owe $3,000 at the regular rate when the promotion ends. That regular rate is often higher than your original card's rate, so you end up worse off than before.
Another common error is making new purchases on the balance transfer card. New purchases do not get the promotional rate and start accruing interest immediately at the purchase rate. If you are not careful, you can end up with two separate balances on the same card — one at 0% and one at 18% or higher — and it becomes hard to track what you owe and when the promotional period ends.
Some people also apply for multiple balance transfer cards in a short time to move debt around. Each application triggers a hard inquiry on your credit report, which can lower your score. Multiple inquiries in a short period can also signal to lenders that you are in financial trouble, making it harder to get approved for future credit.
Finally, do not assume the transfer fee is always worth it. If you only have $800 in debt and the fee is $24, but your old card's rate is only 12%, you might save more by just paying the card down aggressively on the original card instead of paying the fee and dealing with a new account.
Balance transfer cards versus other debt-reduction options
A balance transfer is not the only way to lower your interest rate. A personal loan from a bank or credit union often has a fixed rate and a fixed payoff date, which can force you to stick to a repayment plan. The rate on a personal loan is usually lower than a credit card rate, but higher than a balance transfer promotional rate. Personal loans also do not have transfer fees.
A debt consolidation loan works similarly — it combines multiple debts into one loan with one payment. The advantage is simplicity; the disadvantage is that you may pay more interest overall if the loan term is longer than you need.
If you own a home, a home equity line of credit (HELOC) or home equity loan offers much lower rates because the loan is secured by your house. The risk is that if you cannot pay, the lender can foreclose. This option only makes sense if you are confident you can repay and if you have significant equity in your home.
A balance transfer is fastest and requires no new application process beyond the credit card itself. It works best if you have a clear plan to pay down the debt during the promotional period and if the transfer fee is small relative to the interest you will save.
Frequently Asked Questions
Can I transfer a balance from one card to the same card company?
No. You cannot transfer a balance from a Chase card to another Chase card, or from a Bank of America card to another Bank of America card. The transfer must go to a different card issuer. However, you can transfer balances from multiple different issuers to one new card.
What happens to my credit score when I do a balance transfer?
A balance transfer typically causes a small, temporary dip in your score because the new card application triggers a hard inquiry. Over time, your score may improve because your overall credit utilization drops — you now have more available credit across your cards. Leaving the old card open also helps, because it preserves your credit history length.
Can I transfer a balance if I have bad credit?
Balance transfer cards usually require good to excellent credit — typically a score of 670 or higher. If your score is lower, you may not be approved for a card with a promotional rate. Some cards offer balance transfers to people with fair credit, but the promotional period is usually shorter and the transfer fee higher.
What if I cannot pay off the balance before the promotional rate ends?
You will owe the regular interest rate on whatever balance remains. You can then request another balance transfer to a different card, but this only works if you have good credit and if doing so does not cost more in fees than you save in interest. Alternatively, you can focus on paying down as much as possible before the rate switches, even if you cannot pay it all off.
Do I need to close my old card after the balance is transferred?
No, and you should not. Closing the card can lower your credit score. Instead, leave it open with a zero balance. If it has an annual fee, call and ask the issuer to waive it or move you to a no-fee card. If they refuse, you can close it, but understand that your score will take a small hit.