Can I Do a Balance Transfer From One Credit Card to Another?
Learn how to effectively manage your credit card debt by understanding the complete process of a balance transfer, from preparation to completion.
A credit card balance transfer moves existing debt from one or multiple credit card accounts to a different credit card. This process consolidates outstanding balances onto a new card, often to streamline payments and improve debt repayment.
What a Balance Transfer Involves
A balance transfer relocates outstanding debt from existing credit cards to a new card, typically issued by a different financial institution. The new card issuer pays off the debt on the old cards, and the original debt then resides on the new account.
Credit card companies commonly offer balance transfers with promotional interest rates. These introductory rates, often as low as 0%, attract new cardholders. This shifts your obligation to a single account, potentially under more favorable terms.
Preparing for a Balance Transfer
Before a balance transfer, understand eligibility requirements. Issuers seek a strong credit history, with a good credit score of 670 or higher. Those with fair credit (580-669) may find options, but with fewer promotional offers. Most financial institutions do not permit transfers between cards from the same bank.
Balance transfer fees range from 3% to 5% of the amount transferred. For example, a $5,000 transfer with a 3% fee incurs a $150 charge, added directly to the new card’s balance. Some cards offer lower or no fees, but often with shorter introductory interest rate periods. Calculate how this fee impacts your total debt.
Understand the interest rate structure before a transfer. Promotional introductory Annual Percentage Rates (APRs) often offer 0% APR for six to 21 months. After this period, any remaining balance reverts to a higher, standard APR, specified in the cardholder agreement. Know both the promotional rate’s duration and the ongoing rate.
Gathering necessary information simplifies the application process. You will need account numbers and current balances for each credit card you intend to transfer debt from. Personal identification details, such as your Social Security Number and income information, are also required for the application.
Selecting the appropriate receiving card involves evaluating several factors. Look for cards offering the longest introductory APR period to maximize interest-free debt repayment. Prioritize cards with the lowest or no balance transfer fees, if available, and consider any annual fee.
Steps to Initiate a Balance Transfer
Initiating a balance transfer begins after selecting a credit card and gathering information. Most issuers provide several application methods. You can apply online through their website, over the phone, or via mobile banking applications. Some also offer balance transfer checks.
During the application, provide details about the balances you wish to transfer. This includes account numbers for the cards you are paying off and the exact amount from each. The credit limit on your new card determines the maximum transfer amount, accommodating both the transferred balance and any associated fees.
After submitting your application, the approval and transfer process begins. Timelines vary by issuer, but balance transfers usually take five to seven business days. Some transfers may take longer, up to 14 to 21 days. The new card issuer pays off your old credit card account(s) once approved.
Once the transfer is complete, you will receive confirmation from your new credit card issuer. This notification may come via email, postal mail, or be visible within your online account. Monitor both your new and old accounts to verify the transfer has been applied.
While the balance transfer is processing, continue making at least minimum payments on your old credit card accounts. This prevents late fees and negative impacts on your credit score. Once the transfer is confirmed and the old card’s balance is zero or reduced, you can decide whether to close the old account or keep it open with a zero balance.
After the Transfer is Complete
After a balance transfer, confirm its completion on both your old and new accounts. Verify this by checking online banking portals or monthly statements for both cards. The transferred amount should appear as a payment on your old card, reducing its balance, and as a new balance on your receiving card.
Upon receiving your first statement from the new credit card, understand how the transferred balance is displayed. The transferred amount, along with any balance transfer fees, will be listed as part of your new outstanding balance. This statement will also detail your minimum payment due and the payment due date. Payments must now be directed to this new credit card issuer.
Note the end date of your introductory APR period on the new card. This promotional period provides a window, often several months, during which no interest accrues on the transferred balance. Once this period expires, any remaining balance will begin accruing interest at the card’s standard APR, which is higher. Plan to pay off the transferred amount before this date to maximize savings.
Continue to monitor your old credit card accounts after the transfer. This ensures no residual charges, such as interest accrued before the transfer or small outstanding balances, remain. Clearing any remaining small amounts promptly prevents unexpected interest charges or fees.