How to Transfer a Credit Card Balance to Another Card

A credit card balance transfer involves moving outstanding debt from one credit card account to another. This strategy aims to consolidate debt or reduce interest accrued on existing balances. Consumers often seek offers with a lower or 0% introductory Annual Percentage Rate (APR) for a specific period. This allows individuals to pay down principal debt more efficiently, potentially saving on interest charges. It can be a tool for managing high-interest credit card debt, offering a temporary reprieve from high ongoing interest costs.

Understanding Balance Transfers

A balance transfer moves an existing credit card balance to a new or different credit card account, shifting debt from one issuer to another. Transfers between cards from the same issuer are generally not permitted. The new card typically offers a promotional APR, often 0%, for a set duration. This promotional period can last from several months up to 21 months or more, allowing cardholders to make payments that primarily reduce the principal balance.

Balance transfers typically include a balance transfer fee, calculated as a percentage of the transferred amount, commonly 3% to 5%. For example, a $5,000 transfer with a 3% fee adds $150 to the new balance, totaling $5,150. While some cards offer no balance transfer fees, these often have shorter promotional periods.

Card issuers impose a “transfer limit,” the maximum debt that can be moved to the new card. This limit may be less than the overall credit limit and is determined by factors like credit score and income. If the transferred amount exceeds this limit, the remaining balance stays on the original card, accruing interest at its standard rate. Balance transfers can consolidate multiple credit card debts into a single payment, simplify financial management, and accelerate high-interest debt payoff during the promotional period.

Preparing for a Balance Transfer

Before initiating a balance transfer, assess your eligibility. Lenders evaluate creditworthiness, with a strong credit score, often 670 or higher, being a significant factor for approval, especially for 0% APR offers. Factors like debt-to-income ratio, existing credit balances, and overall credit history are also considered. Consistent on-time payments can improve approval odds.

Research and compare balance transfer offers. Examine the promotional APR, noting if it applies to both transfers and new purchases, and its duration. The balance transfer fee, typically 3% to 5% of the transferred amount, directly impacts total debt. Check for any annual fees and understand the regular APR that applies once the promotional period expires.

Gather necessary information before applying. Provide personal identification, income, and account numbers for cards from which balances will be transferred. Know the exact amount for each transfer. Calculate potential savings by factoring the balance transfer fee against interest on original high-interest debt. Ensure the new card’s credit limit covers the desired transfer amount, including the fee, to avoid leaving residual balances.

Initiating and Completing Your Transfer

After selecting an offer, apply for the new credit card online, by phone, or in person. During application or after approval, provide details for the balance(s) you wish to transfer, including the issuer’s name, account number, and exact amount from each card. Transfers between two cards from the same issuer are generally not possible.

Once approved and details submitted, the new credit card issuer handles the transfer directly. The process can take a few business days to several weeks. Continue making minimum payments on old card(s) until the transfer is fully reflected and the balance is zeroed out to avoid late fees or negative credit reporting.

Monitor both new and old credit card accounts to confirm the transfer’s completion and that the original card’s balance is reduced or eliminated. Once complete, the old credit card account remains open unless you close it. Closing the old card can affect your credit score by reducing available credit and shortening credit history. Consider keeping the old card open, especially if it has no annual fee, storing it securely to prevent new charges.

Managing Your Transferred Debt

Manage transferred debt to maximize balance transfer benefits. The goal is to pay off the entire transferred balance before the promotional APR period concludes. Divide the total transferred amount, including the balance transfer fee, by the number of months in the promotional period to determine the monthly payment needed. Consistent, on-time payments are important, as missing a payment can result in forfeiture of the promotional rate and immediate application of a higher APR.

Understand payment allocation. While minimum payments may apply to lower-interest balances first, any amount paid above the minimum must, by federal law, apply to the highest interest rate balance first. During a 0% APR period, focus on reducing the principal. Setting up automatic payments for the calculated monthly amount helps ensure consistency and prevents missed due dates.

Avoid new debt accumulation. Do not make new purchases on the balance transfer card, as these may not qualify for the promotional APR and could accrue interest immediately. Refrain from using old credit cards if they remain open, to prevent new balances. Regularly review monthly statements for both new and old accounts to track progress and ensure accuracy. As the promotional period ends, plan for any remaining balance; options include paying it off or considering another balance transfer, though fees would apply.