Can You Transfer a Balance From One Credit Card to Another?
Discover if and how you can transfer debt from one credit card to another. Understand the mechanics and critical considerations for this financial move.
A balance transfer involves moving existing credit card debt from one account to a different credit card. This financial option allows consumers to relocate outstanding credit balances, often to manage existing credit obligations more effectively.
Understanding Balance Transfers
A balance transfer shifts outstanding debt from one credit card to a new account. This process helps individuals manage credit card obligations, often to consolidate debt or reduce interest paid.
Two accounts are involved: the original card (transferor) and the new card (transferee). The new card issuer pays off the original account, and the debt appears on the new card.
While credit card debt is most common, some issuers allow transferring other debts like personal or auto loans. This tool focuses on moving credit card debt, distinct from other debt consolidation methods like personal loans.
The Balance Transfer Process
Initiating a balance transfer begins with selecting a new credit card designed for this purpose, often featuring introductory offers. After identifying a suitable card, the consumer applies to the new card issuer.
The application requires details about the existing debt, including the original card issuer’s name, account number, and balance amount. After approval, the new credit card company processes the transfer by directly paying off the old account. The transferred balance, along with any associated fees, then appears on the new card.
The transfer typically takes a few days to several weeks, up to six weeks. Continue making payments on the original card until the transfer is confirmed to avoid late fees. After completion, the old card’s balance becomes zero, though the account usually remains open.
Key Factors for Balance Transfers
Eligibility requirements are a primary consideration for a balance transfer. Card issuers seek applicants with good to excellent credit scores, often 690 or higher. They also assess income and debt levels to determine approval and credit limit.
Balance transfer fees are common, typically 3% to 5% of the transferred amount. This fee is usually added to the new balance.
Promotional Annual Percentage Rate (APR) periods are a significant feature. These introductory rates, often 0%, are temporary. A standard, higher APR applies to any remaining balance after the promotional period. Pay off the transferred balance entirely before this period concludes to maximize interest savings. Failure to do so results in the higher standard rate.
A balance transfer can affect a credit score. Applying for new credit causes a slight, temporary dip due to a hard inquiry. However, managing the transferred debt, such as reducing overall debt and improving credit utilization, can lead to positive long-term impacts. Closing the old account immediately after transfer might negatively affect credit utilization and the average age of accounts.
New purchases on a balance transfer card during a promotional APR period may have a different interest rate than the transferred balance. The promotional rate often applies only to the transferred amount, while new purchases accrue interest at the card’s standard purchase APR from the transaction date.
Credit card issuers impose transfer limits, which is the maximum amount transferable to the new card. This limit might be lower than the overall credit limit. Confirm the new card’s transfer limit is sufficient for the desired debt. After a transfer, keeping the old account open, especially if it has a long credit history and no annual fee, can positively influence credit utilization and overall credit age.