Financial crises often force borrowing as a means of survival. As debt grows and interest charges pile up, you may fall behind making you less likely to qualify to borrow additional funds.
It becomes the financial equivalent of what airplane pilots call a graveyard spiral—a downward turn that worsens as it progresses. In other words: Not staying on top of financial health daily, especially in a crisis, can often lead to a dire shortage of financial options.
If your credit score hasn’t yet plummeted, there may be a stopgap option: a balance transfer. A balance transfer moves a balance from one account to another account or card, ideally to take advantage of a lower or 0% introductory APR, and provides more time to pay down debt.
After an intro period, the 0% intro APR ends and you’ll need to pay the regular APR. There also may be a balance transfer fee, usually 3% to 5% of your transfer amount. However, many credit unions charge no balance transfer fees.
Credit cards best suited for balance transfers are cards with introductory 0% APR periods that often span 12 to 18 months, sometimes longer. For those who find themselves chasing minimum payments and watching a balance bounce back with interest charges, a balance transfer card might help.
Balance Transfer Cards
How Does a Balance Transfer Work?
- A balance transfer involves asking a lender to pay off your debt to another lender. Most cost-effective balance transfers involve moving a balance from an existing card with one issuer to a card from another issuer to take advantage of a low or 0% introductory APR.
- In most cases, you cannot transfer a balance from one card to another card with the same card provider.
- A balance transfer is cost-effective only if the fee costs less than the interest you would pay before the balance is paid in full on the existing account.
- Depending on how your bank chooses to handle balance transfer operations, a balance transfer may involve one card issuer paying off another issuer directly at your request or may involve the issuer sending you a check that you can use to pay down your other account.
How To Transfer a Credit Card Balance
- Open a balance transfer card. Applicants with a credit score of 670 or greater will be more successful, but generally speaking, the higher the score the better.
- Request a balance transfer in the application process or initiate a balance transfer once you’re approved for a balance transfer card. To do this, a user simply adds information about the card from which they’d like to transfer and submits the request to initiate.
- Be aware that transfers can take as many as 21 days to approve and clear, and payments on a previous account will still be required until the balance transfer has cleared.
How Many Balance Transfers Can You Do?
There is no hard-set limit to the amount of balance transfers you can do. Depending on your card’s terms and conditions, you may be able to transfer balances from multiple cards to one card with a 0% intro APR period. However, it’s important to note that the total balance you can transfer to this card will be limited by the card’s credit limit. Your credit limit must be sufficient to cover both the balance and the balance transfer fees. Additionally, some lenders may cap the amount of available balance transfers at an amount less than your total credit limit.
If your credit card debt exceeds the credit limit on your 0% intro APR card, there are other options. If you do not pay off a balance transferred to a 0% intro APR card within the intro period, you could transfer this balance to yet another 0% intro APR card. You can also hold multiple balance transfer cards at the same time.
We recommend exercising extreme caution with both of these options. If you are still making purchases on your credit cards, your debt could get out of control. You should never take on more debt than you can pay down every month, so if managing multiple cards at once seems daunting, focusing your efforts on paying off one balance on one 0% intro APR card may be the best option.
What Is a Balance Transfer Fee?
Many cards offering balance transfers charge balance transfer fees. These fees are typically calculated as a flat fee or percentage—often between 3% and 5%—of the total balance transferred.
Balance transfer fees may outweigh the cost of carrying a balance until it can be paid down, so it’s important to calculate the costs of both options. Let’s compare carrying a $2,000 balance on a credit card that charges 22.63% interest to transferring this balance to a 0% intro APR card with a 5% balance transfer fee.
| Current Credit Card | Balance Transfer to 0% Intro APR Card | |
|---|---|---|
|
Current Credit Card Balance
|
$2,000
|
$2,000
|
|
Credit Card’s Interest Rate
|
22.63%
|
0%
|
|
Balance Transfer Fee
|
N/A
|
$100
|
|
Monthly Payment
|
$200
|
$200
|
|
Time Period
|
11 months
|
10.5 months
|
|
Total Interest Charged
|
$194
|
N/A
|
|
Total Amount Paid
|
$2,194
|
$2,100
|
This example shows that a balance transfer could save you $94. You would also be able to pay down the balance faster if you consistently make a $200 monthly payment. Remember, if you make minimum payments toward your balance, it will take much longer to pay off your bill—and you’d be accruing far more in interest charges than the cost of a one-time balance transfer fee.
Balance Transfer Pros and Cons
If you couldn’t tell by now, balance transfers can be a powerful tool for eradicating debt, if used carefully. Before making any personal finance decisions, it’s important to consider the pros and cons.
Pros
- Save money on interest with a 0% intro APR offer.
- Pay off your balance faster.
- Consolidate debt from multiple credit cards to one location.
Cons
- Balance transfer cards often require strong credit for approval.
- Standard APR applies to all balances not paid in full during the introductory 0% APR period.
- Balance transfer fees usually apply.
- Cards without intro 0% purchase APRs often forfeit their grace period.
Dos and Don'ts of Balance Transfers
- Do beware of the fine print: Not all introductory APRs are created equal.
- Do pay attention to the number of months offered at 0% intro APR and whether the balance transfer must be completed within a specific number of days.
- Do heed the balance transfer fee and calculate how it will impact your savings.
- Do remember that the standard card APR takes effect when the introductory 0% APR period ends. If you fail to pay off your balance before the intro period ends, this is the rate you will be paying.
- Don’t let a balance transfer card become a stopgap that kicks your debt down the road, only to enable its vengeful return.
- Don’t continue making purchases on your credit card, if possible, when your goal is to pay off debt, especially if your 0% intro APR on balance transfers card doesn’t also offer a 0% intro APR on purchases.
Balance Transfer Cards You Should Consider
We have a comprehensive overview of the best balance transfer cards, but here are a couple of our favorites.
Citi Double Cash® Card
The Citi Double Cash card’s simple cash back structure and long-lasting balance transfer APR offer make the Citi Double Cash a favorite among those who want to set it and forget it. It offers a solid cashback rate on all purchases and 0% intro APR on balance transfers, all without an annual fee.
Not everyone wants to chase bonus categories or shuffle cards in their wallet, which makes the Citi Double Cash the perfect “set it and forget it” credit card. It’s one of the only cards around that not only earns 2% cash back on all purchases—1% when purchases are made and another 1% when they’re paid off but also offers a path to using that cash back in the form of more valuable travel points down the road when you’re ready to take the next step.
- Earn up to 2% cash back—1% when the purchase is made and 1% when payment is made on the account
- No cash-back cap—no limit on the amount of cash back that can be earned
- No annual fee
- Introductory APR period for balance transfers
- Foreign transaction fee
- Balance transfer fee
- Lack of benefits seen in other no annual fee cards
- No introductory 0% APR on purchases
- Earn $200 cash back after you spend $1,500 on purchases in the first 6 months of account opening. This bonus offer will be fulfilled as 20,000 ThankYou® Points, which can be redeemed for $200 cash back.
- Earn 2% on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases. To earn cash back, pay at least the minimum due on time. Plus, for a limited time, earn 5% total cash back on hotel, car rentals and attractions booked on the Citi Travel℠ portal through 12/31/24.
- Balance Transfer Only Offer: 0% intro APR on Balance Transfers for 18 months. After that, the variable APR will be 19.24% – 29.24%, based on your creditworthiness.
- Balance Transfers do not earn cash back. Intro APR does not apply to purchases.
- If you transfer a balance, interest will be charged on your purchases unless you pay your entire balance (including balance transfers) by the due date each month.
- There is an intro balance transfer fee of 3% of each transfer (minimum $5) completed within the first 4 months of account opening. After that, your fee will be 5% of each transfer (minimum $5).
Discover it® Cash Back
For moderate spenders who are willing to activate the 5% rotating categories and track the quarterly spending cap, this no-annual-fee card can deliver tidy rewards outside of its ongoing 1% earning rate.
The quarterly categories are the highlight of the Discover it® Cash Back. You’ll often find broad options on its rotating list of categories, such as restaurants, drug stores, gas stations and groceries, which makes it easy for almost any household to take advantage of them. Just don’t get tripped up by forgetting to activate the categories at the start of each quarter, because you can’t do it retroactively to earn bonus cash back on your past purchases.
- 5% cash back on quarterly rotating spending categories throughout the year (activation required)
- Discover will automatically match all the cash back you’ve earned at the end of your first year
- No minimum cash-back redemption
- 5% bonus cash-back rate is limited to $1,500 per quarter in spending
- Bonus categories must be activated quarterly
- Low 1% base reward rate on everything else
- INTRO OFFER: Unlimited Cashback Match for all new cardmembers–only from Discover. Discover will automatically match all the cash back you’ve earned at the end of your first year! There’s no minimum spending or maximum rewards. You could turn $150 cash back into $300.
- Earn 5% cash back on everyday purchases at different places you shop each quarter like grocery stores, restaurants, gas stations, and more, up to the quarterly maximum when you activate. Plus, earn unlimited 1% cash back on all other purchases—automatically.
- Redeem your rewards for cash at any time.
- Discover could help you reduce exposure of your personal information online by helping you remove it from select people-search sites that could sell your data. It’s free, activate with the mobile app.
- Get a 0% intro APR for 15 months on purchases. Then 18.24% to 28.24% Standard Variable Purchase APR applies, based on credit worthiness.
- No annual fee.
- Terms and conditions apply.
Can I Keep Transferring Balances Indefinitely?
It might be tempting to continuously transfer one balance to another, creating a never-ending chain of balance transfers. The assumption is the more times you transfer a balance, the more time you have to pay it off.
While you can transfer a balance more than once, it might not be as easy as you think. You’ll need to find another card offer that makes it worthwhile (like another 0% intro APR on balance transfers) for which you can still qualify. Card issuers may decline a new credit card application based on the number of revolving credit accounts opened in a short term. They may also decline you for the balance transfer itself if they believe you have no ability or intention to pay off your debt.
It’s best to use a balance transfer offer as a tool to help you pay down debt—as quickly and as much as possible. At the end of your intro period, if you still need more time to pay things off, it’s fine to consider a new balance transfer, but they’re not intended to be used repeatedly. Remember, if you transfer a balance again, you must pay another fee.
Is Balance Transfer Worth It?
With a balance transfer card, consumers can access introductory 0% APR periods that usually last at least a year. During that time, balance transfer cardholders can pay down debts without incurring extra interest charges, saving a significant amount of money during the introductory period.
Opening a balance transfer card can be worth it when you need to make a large payment and pay it down over time. Even with a balance transfer fee, you could pay less at the end of the intro 0% APR period.
However, if the amount of money you’re looking to transfer isn’t a large one and the difference between interest and balance transfer fees is small, you’re better off not taking a hit to your credit score by opening a new credit card. We recommend running the numbers before opening a balance transfer credit card.
Find the Best Balance Transfer Credit Cards Of 2024
Frequently Asked Questions (FAQs)
What is a balance transfer APR?
A credit card annual percentage rate (APR) refers to the interest rate applied to any balances carried on the account. A balance transfer APR refers specifically to the APR applied to balances transferred from other cards. Credit cards may issue different APRs for purchases, balance transfers and cash advances. Be sure to read your terms and conditions to familiarize yourself with the APRs associated with your card.
How long does a balance transfer take?
A balance transfer may take days or several weeks to complete, so it’s important to continue making minimum payments on your original account until you receive a statement indicating the balance has been paid in full. Exact timelines vary by issuer—both the issuer receiving a balance transfer and the issuer you’re paying off.
How does a balance transfer affect my credit score?
Making a balance transfer on its own won’t necessarily affect a credit score, but other actions often associated with making a balance transfer might. For instance, opening a new account to transfer a balance or closing an old account after that balance is paid can each have an impact on your credit score.
How can I receive balance transfer offers?
Applying for credit cards with balance transfer offers will likely require good or better credit. This means a score of 670 or higher on the FICO Score. While no credit score guarantees approval for a card or specific offer, you’ll generally do better with a higher credit score.
What happens to an old credit card after balance transfer?
After you’ve transferred a balance from a card, the account won’t necessarily close on its own. So long as you remain in good standing with the issuer, you’ll likely be able to continue using the card. If you choose to close the account, be aware of the impact a closure may have on your credit utilization and credit score.
Does a balance transfer count as a payment?
Initiating a balance transfer out of your account does not count as a payment until the transfer has been fully processed and the old account shows the transfer was received. This process can take a week or more. In the meantime, you’ll still be responsible for making payments on the original account. Otherwise, your original card issuer could still charge you late fees, interest charges or penalty costs.
