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

Credit card balance transfers involve moving existing credit card debt from one account to another. This strategy is often employed to secure a lower interest rate, particularly a promotional 0% annual percentage rate (APR), or to consolidate multiple credit card balances into a single, more manageable payment. Understanding this financial maneuver is important for individuals seeking to optimize their debt repayment efforts. This article explains the process and key factors to consider.

Understanding Balance Transfers

A balance transfer shifts an outstanding debt from one credit card to a different one. The new card issuer typically pays off the original balance directly, and the debt then resides with the new card. This approach can be a strategic tool for managing high-interest credit card debt.

Individuals often pursue balance transfers to leverage lower introductory APRs, which can significantly reduce the amount of interest accrued over a specified period. Another common reason is to consolidate several credit card debts into a single account, simplifying monthly payments and potentially streamlining debt management. This can lead to substantial savings on interest charges over time.

Evaluating the Costs

Several financial aspects warrant careful consideration. A balance transfer fee is typically charged, calculated as a percentage of the amount transferred. This fee commonly ranges from 3% to 5% of the transferred balance, with some issuers imposing a minimum fee, often between $5 and $10. This charge is usually added to the transferred balance, becoming part of the new debt.

Introductory APRs are a primary appeal of balance transfers, frequently offering 0% interest for a set period. This promotional period can last anywhere from six to 18 months, though some offers extend up to 21 or even 28 months. Once this introductory period concludes, any remaining balance will accrue interest at the card’s standard or “go-to” APR, which is typically much higher. Additionally, some balance transfer cards may carry an annual fee, which adds to the overall cost.

The Balance Transfer Process

Initiating a balance transfer involves several steps. Before applying, individuals should compile a list of all credit card debts intended for transfer, noting account numbers, current balances, and issuer names. Checking one’s credit score is advisable, as favorable offers often require good to excellent credit. Researching and comparing offers from various lenders is important, focusing on introductory APR durations, transfer fees, and the regular APR after the promotional period. Personal information, such as name, address, income, and Social Security Number, will be necessary for the application.

Once an offer is selected, the application for the new balance transfer card can typically be submitted online, by phone, or sometimes in person. After approval, the balance transfer is initiated by providing the new issuer with old credit card account numbers and specific amounts. The new card issuer then pays off the designated balances on the old accounts. This process typically takes five to seven business days. It is important to continue making at least the minimum payments on the old credit card accounts until confirmation is received that the transfer is complete and the old balances are zeroed out.

Important Considerations

Several factors should be considered to maximize benefits and avoid drawbacks. Applying for a new credit card typically results in a hard inquiry on one’s credit report, which can cause a temporary dip in the credit score. However, responsible management of the new account, such as reducing credit utilization by paying down the transferred balance, can lead to a positive impact on the credit score over the long term.

Avoid making new purchases on the balance transfer card during the introductory APR period. Many cards apply a higher, standard interest rate to new purchases immediately, even while the transferred balance enjoys a promotional rate. The goal should be to pay off the entire transferred balance before the introductory APR expires, as any remaining debt will then be subject to the higher standard interest rate.

Credit card issuers impose limits on the amount that can be transferred, which may be less than the new card’s full credit limit. Balances cannot be transferred between credit cards issued by the same financial institution. Keeping old credit card accounts open is often beneficial, even with a zero balance, as closing them could negatively affect credit utilization and the length of one’s credit history.