How to Transfer a Balance From One Card to Another

A balance transfer moves debt from existing credit cards to a new card, often with more favorable terms. This financial tool consolidates high-interest debt onto a single card, frequently offering a lower or 0% introductory Annual Percentage Rate (APR) for a specific period. Its purpose is to help individuals pay down outstanding balances more efficiently by reducing accrued interest.

Understanding Key Considerations Before Transferring

Before a balance transfer, understand influencing factors. Eligibility depends on credit score, with stronger profiles qualifying for better offers. Most cards require “good” credit, generally defined as a FICO Score of 670 or higher. Card issuers assess creditworthiness via a hard inquiry, which can temporarily dip your score. Some issuers prevent transfers between their own cards.

Most balance transfers involve a fee, commonly 3% to 5% of the transferred amount. For example, a $5,000 transfer with a 3% fee incurs a $150 charge. This fee is typically added to the transferred balance. Factor this cost into savings calculations, as it reduces the benefit of a low introductory APR.

The introductory interest rate and its duration are central. Many offers provide 0% APR for 6 to 21 months, allowing payments to go directly to principal. After this period, the rate reverts to a higher standard variable APR. Know this post-promotional rate and plan to pay off the balance before the favorable period ends.

While a hard inquiry can temporarily lower a credit score, responsible management can improve it. Reducing your credit utilization ratio (amount of credit used vs. total available) positively impacts your score. Keeping utilization below 30% is recommended for a healthy credit profile. Compare card offers based on fees, introductory APRs, and post-promotional rates to align with debt payoff goals.

Initiating a Balance Transfer

After identifying a suitable balance transfer card, the next step is the application and transfer request. If you don’t have the card, apply for it first. The application requires personal and financial information, similar to any credit card. Issuers review this to determine approval.

Once approved and with the new card, initiate the balance transfer request. Some applications allow requests during the initial process by providing account details. Otherwise, request the transfer online through the new card’s portal or by contacting customer service.

To complete the request, specific information for existing credit card accounts is required. This includes the creditor’s name, account number, and exact transfer amount for each card. Ensure accuracy to prevent delays or errors. It is advisable to transfer slightly less than the new card’s credit limit to account for fees.

Balance transfer processing time varies, usually from a few days to several weeks, depending on the issuer. Continue making regular payments on old accounts until the transfer is confirmed and funds applied. Failing to do so can result in late fees or negative credit marks. Once confirmed, the old card’s balance will reflect the reduction.

Managing Your Transferred Balance

After a balance transfer, confirm its successful application on both old and new card accounts. Review statements to ensure the amount was correctly debited and credited. This prevents ongoing interest charges on the old account for the transferred balance.

A structured payment strategy is important, especially during the introductory APR period. Calculate the monthly payment needed to pay off the balance before the promotional rate expires for maximum interest savings. For example, a $5,000 balance on a 0% APR card for 15 months requires approximately $334 monthly. Making at least the minimum payment on time is important to avoid penalty rates or forfeiture of the introductory APR.

Understanding payment allocation on the new card is beneficial. To ensure all payments contribute to reducing the transferred debt, it is advised to avoid making new purchases on the balance transfer card.

Decide what to do with the old credit card. It remains open unless canceled. One option is to pay off any remaining balance and close the account, reducing new debt temptation. Closing an old card can reduce total available credit and shorten average account age, potentially impacting your credit score by increasing utilization.

Alternatively, keep the old card open with a zero balance. This maintains a longer credit history and higher overall available credit, benefiting your credit score by keeping utilization lower. If the old card has an annual fee, consider downgrading to a no-fee option or closing it if the fee outweighs benefits. Regularly monitor statements for both cards to track progress and ensure your debt reduction plan remains on course.