How to Transfer Funds From One Credit Card to Another

A credit card balance transfer involves moving outstanding debt from one or more credit card accounts to a new credit card, or sometimes an existing one. This process typically aims to consolidate debt and take advantage of a lower interest rate, often a promotional 0% annual percentage rate (APR). By transferring a balance, individuals can redirect more of their payments toward the principal debt rather than accruing high interest charges.

Key Considerations Before Transferring

A primary consideration is the balance transfer fee, which credit card issuers typically charge for this service. These fees usually range from 3% to 5% of the total amount transferred and are often added directly to the new balance. While some cards may offer no balance transfer fee, these are less common and might come with shorter promotional periods.

Another significant factor involves promotional annual percentage rates, commonly offered as 0% introductory APRs. These rates provide a period during which no interest is charged on the transferred balance, typically lasting from 6 to 21 months, though some offers can extend up to 34 months. It is important to know the specific duration of this introductory period and the variable APR that will apply to any remaining balance once the promotional period ends.

Applying for a new credit card to facilitate a balance transfer can temporarily affect your credit score. A hard inquiry is placed on your credit report, which might cause a slight, short-term dip in your score. Additionally, opening a new account can reduce the average age of your credit accounts, which is another factor in credit scoring. However, successfully managing the transferred balance and reducing overall credit utilization can positively impact your credit score in the long run.

The credit limit on the new card must be sufficient to cover the desired transfer amount. Card issuers consider various factors, including your income and overall debt levels, when determining approval and setting credit limits. It is also important to note that balance transfers generally cannot be made between credit cards issued by the same bank or financial institution. If your existing debt is with a particular issuer, you will need to seek a balance transfer card from a different provider.

Steps to Initiate a Balance Transfer

Look for cards offering favorable balance transfer terms, such as a low or 0% introductory APR for a period that allows you to realistically pay down the debt. Review the balance transfer fee structure, aiming for the lowest possible percentage or a fee-free option if available. Evaluate the standard variable APR that will apply after the promotional period, as this rate will determine interest charges on any remaining balance.

This typically includes personal identification details such as your full name, current address, Social Security Number, and date of birth. You will also need to provide financial information, including your income and employment details. For the balance transfer itself, have the account numbers, current balances, and issuer names for each existing credit card from which you intend to transfer debt.

Applications for balance transfer credit cards can generally be submitted through various channels. Many card issuers offer convenient online application portals where you can enter all the required personal and financial information. Some may also allow applications over the phone or in person at a bank branch. When using an online portal, ensure all fields related to the balance transfer request are accurately completed, specifying the exact amounts to be transferred from each external account.

Completing and Managing the Transfer

The time it takes for a balance transfer to be approved and for funds to move can vary significantly among card issuers, typically ranging from a few days to several weeks. It is important to continue making at least the minimum payments on your old credit card accounts until you receive confirmation that the transfer is complete. This ensures you avoid late fees or negative impacts on your credit score during the transition.

You will typically receive notification of your application’s approval and the successful completion of the balance transfer through email, postal mail, or by checking your new online account statements. You then have a decision to make regarding the old card: you can keep the account open with a zero balance, which can be beneficial for your credit history and utilization ratio, or you may choose to close it. If a partial balance was transferred, continue making payments on the remaining amount on the old card.

Make timely payments, ensuring that at least the minimum payment is submitted by the due date each month to avoid losing the introductory rate. Aim to pay more than the minimum whenever possible to reduce the principal balance aggressively. It is also important to avoid making new purchases on the balance transfer card during the promotional period, as these new charges may accrue interest at a different, often higher, rate than the transferred balance. Regularly review your new credit card statements to monitor the transferred balance and any interest charges that may apply after the introductory period.