Can I Transfer My Credit Card Balance to Another Card?

A credit card balance transfer moves existing debt from one or more credit card accounts to a new card, ideally one with a lower interest rate. This helps consumers consolidate debt and save money on interest. By transferring a balance to a card with a promotional low or 0% Annual Percentage Rate (APR), payments can directly reduce the principal balance rather than going towards interest. This tool makes debt repayment more manageable.

Eligibility and Considerations Before Applying

Before a balance transfer, understand the requirements and financial implications. Lenders generally require good to excellent credit for approval of new cards offering attractive balance transfer promotions. A strong credit profile, often a FICO score of 670 or higher, increases the likelihood of qualifying for favorable terms, including longer introductory APR periods and higher credit limits.

Most balance transfers incur a fee, commonly ranging from 3% to 5% of the transferred amount. For instance, a $5,000 transfer with a 3% fee adds $150 to your total balance. While some cards offer no balance transfer fee, paying the fee can still result in savings if the interest saved during the promotional period outweighs this upfront cost.

Balance transfer cards feature an introductory 0% APR period, typically lasting 6 to 21 months, though some extend up to 34 months. This period allows you to pay down your balance without accruing new interest, making every payment more effective. Know the duration of this promotional period and the regular APR that applies once it expires, as any remaining balance will then accrue interest at the standard rate.

Limits exist on how much debt can be transferred, usually tied to the new card’s credit limit. The total amount transferred, including any balance transfer fees, cannot exceed the new card’s credit limit. Transfers are generally not allowed between credit cards from the same issuer, as these offers attract new customers. Review the terms and conditions of any offer to understand specific fees, promotional periods, and restrictions.

The Application and Transfer Process

After evaluating your financial situation and identifying a suitable balance transfer offer, apply for the new credit card. Applications can typically be submitted online, by phone, or in person. During or after the application and approval, you will be prompted to provide details for the balances you wish to transfer.

Supply the account numbers and specific amounts from your old credit card accounts. The new card issuer will then initiate the transfer, paying off your old accounts. This process can take a few days to several weeks, with some transfers posting within 2 to 21 days.

Continue making at least minimum payments on your old credit card accounts until the transfer is confirmed and the balance is reflected on your new card. Failing to do so could result in late fees, interest charges, or a negative impact on your credit score if payments are missed. After the transfer, monitor both your old and new credit card statements to ensure the transfer was successful and accurate.

Managing Your Balance After Transfer

After a balance transfer, focus on strategic repayment to maximize the benefit. Prioritize paying down the transferred balance, ideally before the introductory APR period expires. Making consistent payments larger than the minimum required can significantly reduce the principal debt.

Avoid making new purchases on the balance transfer card. New purchases may not qualify for the introductory APR and could begin accruing interest immediately, undermining the transfer’s purpose. Using the card for new spending adds to the debt and makes it harder to pay off the transferred balance within the interest-free period. Set reminders for when the introductory APR period concludes to prevent unexpected interest charges on any remaining balance.

A balance transfer can temporarily impact your credit score due to a hard inquiry from the new card application and a reduction in the average age of your credit accounts. However, if managed responsibly by reducing overall debt and improving your credit utilization ratio, it can lead to a long-term positive effect on your credit score.

Deciding what to do with the old credit card account after a balance transfer requires careful thought. Closing the account can reduce the temptation to incur new debt, but it might negatively affect your credit score by reducing overall available credit and shortening your credit history. Keeping the old account open, especially if it has a long history and no annual fees, can help maintain a healthy credit utilization ratio and average account age, provided you avoid using it.