How to Transfer a Balance Between Credit Cards

Preparing for a Balance Transfer

Before initiating a balance transfer, gather specific information from your existing credit accounts. This includes account numbers, current outstanding balances, and the name of the issuing bank for each card.

The new credit card issuer will require personal and financial information to process your application. This includes your full legal name, current address, and Social Security Number. Your employment status and annual income will also be requested.

Evaluate potential new credit card offers. Look for cards that offer a promotional Annual Percentage Rate (APR) on balance transfers, often 0% for 6 to 21 months. Note the exact length of this promotional period, as the standard APR will apply once it expires.

Consider balance transfer fees, which are charged when the balance is moved. This fee is a percentage of the transferred amount, often between 3% and 5%. For example, a $1,000 transfer with a 3% fee would incur a $30 charge, which is added to the transferred balance.

Ensure the new credit card offers a sufficient credit limit to accommodate the balance you intend to transfer, including any associated balance transfer fees. Review eligibility requirements, as issuers consider factors like your credit score (typically 670 or higher) and your existing relationship with the bank.

The Balance Transfer Application Process

After gathering necessary information and evaluating card offers, initiate the balance transfer application. Most credit card issuers provide multiple avenues, with online portals being the most common and quickest. You may also apply over the phone or by visiting a bank branch.

When completing the application, input the details gathered during preparation. This includes your personal information, such as your name, address, and Social Security Number. For the balance transfer, provide the account number and the exact balance you wish to transfer from each existing credit card.

Before submitting the application, carefully review all entered information for accuracy. Double-checking account numbers and transfer amounts can prevent delays or errors. Once confident, proceed with submission.

After submission, expect a response from the credit card issuer regarding your application status. Approval or denial can be immediate for online applications, or take several business days, typically within 7 to 10 days. The issuer might request additional information.

Upon approval, the balance transfer process begins, moving the specified debt from your old credit card to your new one. This transfer typically takes several business days to a few weeks, often 7 to 21 days. Continue making payments on your old card until you confirm the balance has successfully transferred and is reflected on your new account.

Understanding the Transferred Balance

After a balance transfer is completed, understand the financial implications and how to manage the new debt. One immediate impact is the balance transfer fee, typically applied directly to your new credit card balance. For instance, if you transferred $5,000 with a 3% fee, an additional $150 would be added, making your initial balance $5,150 on the new card.

The promotional APR, often 0%, is a benefit of a balance transfer, but it is temporary. Know the exact date when this introductory period ends, as a higher, standard APR will then apply to any remaining balance. This standard APR can vary, often ranging from 15% to 29% or more, depending on your creditworthiness and the card’s terms.

Once the promotional period concludes, any outstanding balance will begin accruing interest at the standard variable APR. Your monthly payments may need to increase to avoid accumulating more interest charges. Understanding this transition point is important for debt management.

Payment allocation rules also affect how your payments are applied, especially if you make new purchases on the transferred card. Under federal law, payments exceeding the minimum due must be applied to the balance with the highest APR first. This typically means new purchases made at a higher standard APR will be paid down before the promotional balance, unless the promotional period has expired.

Managing this new debt involves consistently making at least the minimum required payment by the due date to avoid late fees and maintain a good payment history. To maximize the benefit of the promotional APR, a strategy of paying more than the minimum payment, ideally enough to pay off the entire transferred balance before the promotional period ends, is often recommended. Making new purchases on the transferred card during the promotional period can complicate debt repayment and potentially reduce the effectiveness of the lower APR on the transferred balance.

Finally, it is important to verify that the balance on your old credit card is indeed zero after the transfer is complete. You can do this by checking your old account statements or logging into your online account. If a residual balance remains, contact the old card issuer to resolve any discrepancies.