How to Transfer a Balance From One Credit Card to Another

A balance transfer moves existing credit card debt to a new card, often to secure a lower interest rate. This process helps individuals manage and reduce outstanding balances, consolidating debt and potentially saving money on interest charges over time.

Understanding Balance Transfers

A credit card balance transfer shifts outstanding debt from one credit card account to another. This move is typically made to a card offering a more favorable interest rate, such as an introductory 0% annual percentage rate (APR) period. When approved, the new credit card issuer pays off the specified balance on your old card. That debt then appears on your new card account, along with any associated transfer fees.

This mechanism allows payments to directly reduce the principal balance. Consolidating multiple debts onto a single card can also simplify monthly payments and streamline financial management. The principal amount of your debt generally remains the same, but reduced interest can accelerate debt repayment.

Preparing for a Balance Transfer

Before initiating a balance transfer, assess your financial standing and research available options. A strong credit history is necessary to qualify for advantageous offers, especially those with a 0% introductory APR. Card issuers often look for applicants with a good to excellent credit score, typically defined as a FICO score of 670 or higher. They also consider income levels and existing debt.

Identify the specific credit card accounts from which you intend to transfer balances. You will need the card issuer’s name, full account number, and the precise amount to transfer from each card. Review current interest rates on existing cards to determine which balances would benefit most. Researching offers involves comparing introductory APR periods, the standard variable APR afterward, and any balance transfer fees. Some cards may offer extended introductory periods or lower fees, though fee-free options with long 0% periods are less common.

Initiating the Balance Transfer

To initiate the transfer, apply for the selected balance transfer card. The application requires personal and financial information, including your Social Security number, income, and specific account details for the cards you are transferring from. This includes the original card issuer’s name, account number, and the exact debt amount.

Applications can be submitted online or by phone. You may specify the amount to transfer from each account. The new card’s credit limit might not cover all desired transfers, so prioritize high-interest balances if limits are a concern. After approval, the transfer process can take a few days to several weeks, with some transfers completing within 3 to 14 days. Continue making minimum payments on old accounts until the transfer is fully processed and confirmed.

Understanding Balance Transfer Costs

Balance transfers typically involve certain costs. The most common is a balance transfer fee, usually a percentage of the amount transferred. These fees range from 3% to 5% of the transferred balance, with a stated minimum. For example, a $1,000 transfer at a 3% fee adds $30 to your new balance. This fee is typically added to the transferred balance, meaning you will pay interest on it if not paid in full before the introductory period ends.

Many balance transfer cards offer an introductory 0% APR for a promotional period, lasting six to 21 months or longer. This period allows payments to go entirely toward the principal balance without accruing interest. Once this period concludes, any remaining balance is subject to the card’s standard variable APR, which can be considerably higher. It is important to understand both the introductory and post-introductory APRs when evaluating an offer.

Managing Your New Balance

After a balance transfer, diligent management of your new balance is necessary to maximize the benefits. Make timely payments to the new credit card account, ensuring at least the minimum payment is made each month. Failing to do so could result in forfeiture of the introductory APR and application of a higher penalty rate. The primary goal is to pay off the entire transferred balance before the introductory APR period expires, ensuring all your payments directly reduce the principal debt, saving you from future interest charges.

Consider creating a detailed budget and setting up automatic payments. While the old credit card account will remain open unless you close it, avoid making new purchases on it or any other credit cards during repayment. Keeping the old account open with a zero balance can positively influence your credit utilization ratio and the average age of your credit accounts, which are factors in credit scoring. If the old card carries an annual fee or presents a temptation for new debt, closing it may be suitable.