How to Transfer a Balance to Another Credit Card

A credit card balance transfer allows you to move existing debt from one or more credit cards to a different credit card account. This process aims to consolidate multiple debts and reduce the total interest paid over time. It involves transferring a balance from a high-interest card to a new card that offers a lower, often promotional, interest rate for a specific period. The purpose of such a transfer is to simplify debt management and save on interest charges.

Understanding Balance Transfers

A balance transfer involves shifting an outstanding balance from one credit card to another, usually to secure more favorable terms. The new card issuer pays off the designated balance on the old card, and the cardholder then owes that amount to the new issuer under their terms.

A “balance transfer fee” is a charge imposed by the new card issuer for facilitating the transfer, typically ranging from 3% to 5% of the transferred amount. This fee is generally added directly to the transferred balance.

An “introductory or promotional APR” is a temporarily reduced interest rate, often as low as 0%, applied to the transferred balance for a set duration. This promotional period can range from six months up to 21 months, providing a window to pay down debt without accruing interest. Once this introductory period concludes, any remaining balance will be subject to the card’s “standard APR.” This rate applies to the unpaid portion of the transferred balance and any new purchases made on the card.

Preparing for a Balance Transfer

Before initiating a balance transfer, gather necessary information. Card issuers typically require applicants to have a good to excellent credit score, often a FICO score of 670 or higher, to qualify for balance transfer offers. Lenders may also consider your overall debt levels and debt-to-income ratio as part of their eligibility assessment.

You will need the account numbers, card issuer names, and current balances for each account from which you intend to transfer debt. This information ensures accuracy when completing the transfer request.

When choosing a new credit card for a balance transfer, evaluate the length of the introductory APR period to ensure it provides sufficient time to pay down the transferred balance. Compare balance transfer fee percentages, as these can impact the total cost. Note the standard APR that will apply after the promotional period ends, as this rate will affect any remaining debt. Confirm any limits on the amount that can be transferred, and be aware that transfers between cards from the same bank or issuer are generally not permitted.

Initiating the Balance Transfer

If you are applying for a new credit card for the transfer, the balance transfer request is often integrated into the application form. You will typically indicate the existing credit card accounts and the amounts you wish to transfer. This can often be done online or over the phone.

If you are utilizing an existing credit card account for the balance transfer, you can generally initiate the request through the card issuer’s online banking portal, mobile application, or by contacting their customer service. You will need to provide the necessary details for the old account, including the account number and the specific balance to be moved. It is important to specify the exact amount you wish to transfer, keeping in mind the credit limit of the receiving card.

After submitting your request, you will typically receive a confirmation, and the transfer process will begin. The time it takes for a balance transfer to complete can vary, generally ranging from a few business days to several weeks, with some issuers taking up to six weeks. It is important to continue making at least minimum payments on your old accounts until you verify that the transfer has fully posted and the balance on the old account has been reduced or zeroed out.

Managing Your Transferred Balance

After a balance transfer, diligently monitor your accounts. Review statements from both the old and new credit cards to confirm the transferred amount was accurately applied and your old account reflects the reduced or paid-off balance. This vigilance helps ensure no unexpected charges or lingering debt remain on the original card.

Making timely payments on your new balance transfer card is essential to maintain the benefits of the promotional APR. Missing a payment can often result in the forfeiture of the introductory rate, causing the standard, higher interest rate to apply immediately to your entire transferred balance. Consistently meeting at least the minimum payment due is necessary to avoid such penalties and keep your repayment plan on track.

Aim to pay down the entire transferred balance before the introductory APR period expires. Calculate the monthly payment required to achieve this goal, as it will likely be higher than the minimum payment specified by the card issuer. Paying off the balance in full within the promotional window ensures you avoid interest charges on that debt.

Avoid accruing new debt on either the newly transferred card or your old credit cards. New purchases on the balance transfer card can diminish the effectiveness of the low promotional rate, as new purchases may accrue interest at a different, higher rate. Using your old, now-paid-off cards for new spending can lead to accumulating more debt, undermining the purpose of the initial transfer.