How to Transfer the Balance of a Credit Card

Credit card balance transfers involve moving an outstanding balance from one credit card to another, typically to a new card with more favorable terms. The primary objective is to secure a lower interest rate, often an introductory 0% annual percentage rate (APR), which can significantly reduce the cost of carrying debt over a defined period. This maneuver reorganizes existing credit obligations rather than eliminating debt entirely.

Preparing for a Balance Transfer

Before initiating a balance transfer, understand eligibility criteria and key financial terms. Credit card issuers generally require good to excellent credit scores, typically a FICO score of 670 or higher, for the most advantageous offers. Lenders also evaluate income and overall debt levels to assess creditworthiness and determine approval. Some issuers may prevent transfers from their own existing cards.

A promotional or introductory APR is a temporary interest rate, often 0%, applied to the transferred balance for a specific duration. This period can range from six to 24 months, with some offers extending up to 34 months. Once it concludes, any remaining balance will be subject to the card’s standard, higher regular APR.

A balance transfer fee is a common charge, typically 3% to 5% of the transferred amount, often with a minimum of $5 or $10. This fee is added directly to the transferred balance on the new card. While some cards offer no balance transfer fees, these are less common and may feature shorter promotional periods.

Gathering necessary information streamlines the balance transfer process. Applicants need account numbers and current balances for each credit card from which debt will be transferred. Personal identification details, such as a Social Security Number, date of birth, and current address, are required. Income information is also necessary for the credit card issuer to assess repayment capacity.

Selecting an appropriate new credit card is a careful decision based on the terms discussed. Prioritize cards offering a promotional APR period long enough to reasonably pay off the transferred debt. Evaluate the balance transfer fee, aiming for the lowest possible percentage or a no-fee option if available, considering its impact on the total amount to be repaid. The regular APR that applies after the promotional period should also be a consideration, especially if there is a possibility of a remaining balance.

The Balance Transfer Process

After preparation, submit the application for the new balance transfer credit card. Most issuers provide multiple avenues for application, including online portals, mobile applications, or by phone. During the application, input the account information and specific amounts to transfer from existing credit cards. Some applications integrate the balance transfer request directly into the initial form.

Upon submission, the new card issuer will review the application, which includes performing a credit check. This credit inquiry can temporarily affect your credit score. The approval process can vary, with some decisions being immediate, while others may take several days or longer. Once approved, the issuer will typically communicate the credit limit and the terms of the balance transfer offer.

The execution of the balance transfer involves the new credit card issuer paying off the designated balances on your old credit card accounts. This direct payment mechanism means you generally do not handle the funds yourself. The time it takes for the balance transfer to complete can range from a few business days to several weeks, with some institutions reporting up to six weeks for the process. It is important to continue making at least the minimum payments on your old credit cards until the transfer is fully reflected and confirmed. After the transfer, the new card’s statement will display the consolidated balance, including any applicable balance transfer fees.

Managing Your Account After Transfer

Completing a balance transfer marks the beginning of repayment. Making timely payments, and ideally paying more than the minimum due, is important to paying down the transferred balance before the promotional APR expires. Every dollar paid during the interest-free period directly reduces the principal debt, maximizing the transfer’s benefit. Establishing a consistent payment strategy ensures progress toward becoming debt-free.

Avoiding new debt on both the newly acquired balance transfer card and any old credit cards is important. Using the balance transfer card for new purchases during the promotional period can complicate repayment efforts, as new purchases may accrue interest at a higher standard APR immediately. Deciding what to do with the old credit cards, once their balances are transferred, requires careful consideration. While closing old accounts can prevent future spending, it may also negatively impact your credit score by reducing your overall available credit and shortening your credit history. Keeping old accounts open with a zero balance can positively affect your credit utilization ratio.

Understand the exact end date of the promotional period. Mark this date on your calendar and have a clear plan for any remaining balance. If the debt is not fully repaid by then, the card’s regular, often higher, APR will apply to the outstanding amount. This transition can significantly increase your monthly interest charges.

Monitoring statements from both the new balance transfer card and the old credit cards is an ongoing responsibility. Regularly review these statements to confirm that the transfer was processed correctly and that the balances are as expected. This vigilance helps track your progress toward debt repayment and identifies any discrepancies promptly. Consistent review ensures the balance transfer strategy remains effective.