Can You Transfer a Balance From One Credit Card to Another?

A credit card balance transfer involves moving outstanding debt from one credit card to another. This strategy is often employed to consolidate multiple debts into a single payment or to take advantage of a lower interest rate, particularly a promotional offer. Shifting a balance can reduce the total interest paid over time, making debt repayment more manageable. This process can be a useful financial tool.

Eligibility and Requirements

Before initiating a balance transfer, consumers need to meet specific criteria. A strong credit history is a primary factor, with many favorable offers requiring a good to excellent credit score, often above 670. Lenders assess creditworthiness to establish credit limits.

The debt intended for transfer must originate from another credit card. While some offers may permit transfers from other types of consumer debt, such as personal loans, the most common scenario involves credit card to credit card transfers. Most financial institutions do not allow transfers between credit cards issued by the same bank.

The new credit card’s available credit limit plays a role in how much debt can be transferred. The transferred amount cannot exceed the newly approved credit limit, and often, only a portion of the limit is available for balance transfers. Both the existing credit card account and the new account must be in good standing, meaning payments have been made on time and the accounts are not delinquent.

The Application Process

Initiating a credit card balance transfer begins with applying for a new credit card offering balance transfer promotions. The application usually includes a section to indicate a balance transfer. This involves providing details about the existing credit card debt.

The necessary information for the transfer includes the name of the original creditor, the account number of the card from which the balance will be transferred, and the specific amount intended for transfer. Providing accurate information is important. Some issuers may also request the current balance on the old card.

Once the new card application is approved, the transfer request is processed. The timeline for a balance transfer to complete can vary, generally taking anywhere from 7 to 21 business days. During this period, it is important to continue making minimum payments on the old credit card account until confirmation that the transfer has been fully processed. Upon completion, the transferred amount will appear as a charge on the new card and a corresponding credit on the old card.

Understanding Balance Transfer Fees and Interest

A balance transfer incurs a fee, usually a percentage of the amount transferred. The fee commonly ranges from 3% to 5% of the transferred sum. For example, transferring $5,000 with a 3% fee would result in a $150 charge, added to the new card’s balance.

Many balance transfer offers include a promotional Annual Percentage Rate (APR), often 0%, for a limited introductory period. This promotional period can range from 6 to 21 months, providing an opportunity to pay down the principal balance without accruing interest. After this introductory period expires, the interest rate reverts to the standard APR for that card, which can be significantly higher.

Interest accrues differently during and after the promotional period. While the transferred balance may be interest-free, new purchases made on the balance transfer card often do not share the same promotional rate and may accrue interest immediately at the standard purchase APR. This can complicate repayment efforts if new debt is added to the card before the transferred balance is paid off.

Managing Your Account After Transfer

After a balance transfer is completed, a strategic payment approach is important to maximize the benefits of the lower interest rate. Making consistent payments, ideally exceeding the minimum amount due, helps reduce the principal balance before the promotional APR expires. Focusing on paying down the transferred debt during the introductory period is the main objective.

Avoid making new purchases on the credit card used for the balance transfer. New purchases may not be subject to the promotional APR and could accrue interest immediately, potentially at a higher rate than the transferred balance. This can diminish the financial advantage gained from the transfer by adding new, interest-bearing debt.

Deciding what to do with the old credit card account requires consideration. While closing the account might seem logical, it could potentially impact your credit score by reducing your overall available credit and shortening your credit history. Keeping the account open but unused can maintain a higher total credit limit and a longer average account age, both of which are favorable for credit scoring. Regularly monitoring both the new and old credit card statements is also important to ensure the transfer was correctly applied and to track all payments and balances.