How to Successfully Transfer Credit Card Balances

Quick answer

• Look for 0% introductory APR offers on balance transfer credit cards.
• Understand the balance transfer fee, typically 3-5% of the amount transferred.
• Calculate how much you can pay off during the 0% APR period.
• Have a plan to pay off the transferred balance before the introductory period ends.
• Monitor your credit score to ensure it remains healthy.
• Avoid making new purchases on the balance transfer card unless it also has a 0% intro APR for purchases.

Who this is for

• Individuals carrying high-interest credit card debt.
• Those looking to consolidate multiple credit card payments into one.
• People who can commit to a repayment plan to avoid accruing interest after the introductory period.

What to check first (before you act)

Goal and timeline

Before initiating a balance transfer, clearly define your objective. Are you aiming to pay off the debt completely within a specific timeframe, or simply reduce the interest paid over the next year? Having a clear goal and a realistic timeline will guide your choice of balance transfer card and repayment strategy. For example, if your goal is to eliminate $5,000 in debt within 12 months, you’ll need to pay approximately $417 per month, plus any applicable fees.

Current cash flow

Analyze your monthly income and expenses to determine how much extra you can allocate towards debt repayment. A balance transfer is only effective if you can make substantial payments during the 0% introductory APR period. If your current cash flow is tight, a balance transfer might not be the best solution, or you may need to adjust your budget significantly.

Emergency fund or safety buffer

Ensure you have a readily accessible emergency fund before transferring balances. This fund should cover 3-6 months of essential living expenses. Relying on a balance transfer card for emergencies after transferring existing debt can lead to accumulating more high-interest debt.

Debt and interest rates

List all your current credit card balances, their interest rates (APRs), and minimum payments. This will help you identify which debts are costing you the most in interest and prioritize them for transfer. Compare these rates to the potential fees and ongoing APRs of balance transfer cards.

Credit impact

Understand how a balance transfer can affect your credit score. Applying for a new card will result in a hard inquiry, which can temporarily lower your score. However, successfully managing and paying down debt on the new card can improve your credit utilization ratio and overall creditworthiness over time.

Step-by-step (how to balance transfer how to)

1. Research balance transfer offers:

• What to do: Look for credit cards advertising 0% introductory APR periods on balance transfers.
• What “good” looks like: Cards with introductory periods of 12-21 months are ideal.
• Common mistake and how to avoid it: Focusing only on the intro APR without checking the regular APR. Avoid this by noting the ongoing APR after the intro period ends.

2. Compare balance transfer fees:

• What to do: Check the fee associated with transferring your balance. This is usually a percentage of the amount transferred.
• What “good” looks like: A fee of 3% or less. Some cards may waive this fee for a limited time.
• Common mistake and how to avoid it: Not factoring the fee into your total cost. Avoid this by calculating the total cost, including the fee, for different transfer amounts.

3. Check the introductory period length:

• What to do: Verify how long the 0% APR offer lasts.
• What “good” looks like: A longer introductory period gives you more time to pay down the debt without interest.
• Common mistake and how to avoid it: Assuming the 0% APR applies to new purchases too. Avoid this by checking the card’s terms for purchase APRs.

4. Determine your repayment strategy:

• What to do: Calculate how much you need to pay each month to clear the balance before the intro APR expires.
• What “good” looks like: A concrete monthly payment plan that ensures the debt is paid off on time.
• Common mistake and how to avoid it: Underestimating the total amount needed or the time required. Avoid this by creating a detailed budget and payment schedule.

5. Apply for the balance transfer card:

• What to do: Submit an application for the chosen credit card.
• What “good” looks like: Approval for a card with a credit limit sufficient to cover your transferred debt.
• Common mistake and how to avoid it: Applying for too many cards at once. Avoid this by researching thoroughly and applying for only one or two promising options.

6. Initiate the balance transfer:

• What to do: Follow the card issuer’s instructions to transfer your existing balances. You’ll typically need the account numbers and amounts of the debts you wish to transfer.
• What “good” looks like: The transfer is completed accurately and within the stated timeframe.
• Common mistake and how to avoid it: Providing incorrect account information. Avoid this by double-checking all details before submitting.

7. Continue making minimum payments on old cards (temporarily):

• What to do: Keep paying the minimum on your old credit cards until you confirm the balance transfer has posted and the old accounts are closed or reflect a zero balance.
• What “good” looks like: Your old accounts are paid off, and you’re no longer receiving statements with balances.
• Common mistake and how to avoid it: Stopping payments on old cards too early. Avoid this by waiting for confirmation that the transfer is complete and the old balance is zero.

8. Focus on paying down the new balance:

• What to do: Make consistent, substantial payments to the new balance transfer card.
• What “good” looks like: The balance is decreasing significantly each month, on track to be paid off before the intro APR ends.
• Common mistake and how to avoid it: Treating the new card like free money and making only minimum payments. Avoid this by sticking to your repayment plan.

9. Avoid new purchases on the balance transfer card (if possible):

• What to do: Use the new card only for the transferred balance unless it also offers a 0% APR on purchases.
• What “good” looks like: The card is solely used for debt repayment, not for accumulating new debt.
• Common mistake and how to avoid it: Using the card for everyday spending. Avoid this by keeping it for the sole purpose of paying off the transferred debt.

10. Monitor your progress and credit score:

• What to do: Regularly review your balance transfer card statements and check your credit report.
• What “good” looks like: Your debt is diminishing, and your credit score is stable or improving.
• Common mistake and how to avoid it: Forgetting about the debt until the intro period ends. Avoid this by setting regular reminders for payments and progress checks.

Common mistakes (and what happens if you ignore them)

Mistake	What it causes	Fix
Not understanding the balance transfer fee	You pay more than anticipated, reducing the savings from the 0% APR.	Calculate the fee upfront and factor it into your total repayment cost.
Ignoring the regular APR after the intro period	You’ll accrue high interest on any remaining balance, negating the benefits of the transfer.	Create a strict payment plan to pay off the balance before the introductory period ends.
Making new purchases on the balance transfer card	You can rack up new debt, potentially at a high APR, making it harder to pay off the transferred balance.	Use the card only for the balance transfer, or ensure it has a 0% intro APR for purchases and a clear plan for those too.
Stopping payments on old cards too soon	You could incur late fees and damage your credit score while the transfer is still processing.	Continue making minimum payments on old cards until you confirm the transfer is complete and the old balances are zero.
Not having a solid repayment plan	You’ll likely carry a balance beyond the intro period and end up paying significant interest.	Calculate your required monthly payment and budget accordingly. Automate payments if possible.
Transferring less than you can afford to pay off	You might not pay off the debt within the intro period, and the fee might outweigh the interest saved.	Transfer only what you can realistically pay off during the 0% APR period, considering the fee.
Relying on the transfer as a long-term solution	It’s a temporary fix for high interest; it doesn’t address underlying spending habits.	Use the transfer as a tool to pay down debt faster and commit to changing spending habits to avoid future high-interest debt.
Not checking credit score requirements	You might apply for cards you won’t be approved for, leading to unnecessary hard inquiries.	Research the credit score typically required for balance transfer cards before applying.
Miscalculating the total debt including fees	You might think you’re saving more money than you actually are.	Add the balance transfer fee to the principal amount you plan to transfer to get the true cost.
Not closing old accounts (strategically)	Keeping old, unused cards open can sometimes help credit utilization, but if they have high annual fees, close them.	Evaluate if closing old accounts is beneficial for your credit score and overall financial health, considering annual fees and credit utilization.

Decision rules (simple if/then)

• If your goal is to eliminate debt quickly, then focus on cards with the longest 0% introductory APR periods because this maximizes your interest-free repayment time.
• If you have multiple high-interest cards, then a balance transfer is likely beneficial because it consolidates debt and reduces interest costs.
• If the balance transfer fee is 5% or more, then carefully calculate if the savings from the 0% APR will outweigh the fee, especially for smaller balances.
• If your credit score is fair to good, then you have a good chance of qualifying for a balance transfer card, but check specific issuer requirements.
• If you cannot commit to paying off the balance within the introductory period, then a balance transfer may not be the best strategy because you’ll face high interest rates on the remaining amount.
• If you have a significant amount of debt, then ensure the credit limit on the balance transfer card will be sufficient to cover it all.
• If you are prone to overspending, then consider if a balance transfer will enable you to spend more rather than pay down debt, and if so, avoid it or seek budgeting help.
• If you need to make new purchases and pay them off interest-free, then look for a balance transfer card that also offers a 0% introductory APR on purchases.
• If your current credit card APRs are already low (e.g., below 10%), then the savings from a balance transfer might not be worth the fee and the hassle.
• If you are close to paying off a high-interest debt, then consider if the remaining interest cost is worth the effort of a balance transfer.
• If you have an excellent credit score, then you are more likely to qualify for the best balance transfer offers with lower fees and longer intro periods.
• If you plan to use the balance transfer card for the long term, then consider its regular APR and rewards program after the introductory period expires.

FAQ

What is a balance transfer?

A balance transfer is moving debt from one credit card to another, typically to take advantage of a lower or 0% introductory Annual Percentage Rate (APR).

How much does a balance transfer cost?

Most balance transfers come with a fee, usually between 3% and 5% of the amount you transfer. Some cards may offer a fee-free period or a lower fee.

Can I transfer any credit card balance?

Generally, you can transfer balances from most major credit cards. However, you usually cannot transfer balances between cards issued by the same bank.

What happens to my old credit card accounts?

After a successful balance transfer, you should continue making payments on your old accounts until the balance is fully transferred and the accounts reflect a zero balance. You can then decide whether to close them or keep them open.

Will a balance transfer affect my credit score?

Applying for a new card results in a hard inquiry, which can slightly lower your score temporarily. However, paying down debt on the new card can improve your credit utilization and boost your score over time.

How long does a balance transfer take?

The transfer process can take anywhere from a few days to a couple of weeks, depending on the credit card issuers involved.

What if I can’t pay off the balance before the 0% APR period ends?

Any remaining balance will then be subject to the card’s regular APR, which can be quite high. It’s crucial to have a plan to pay it off before the introductory period expires.

Can I transfer a balance from a store card?

Yes, you can often transfer balances from store cards, provided they are major credit cards accepted for balance transfers.

What this page does NOT cover (and where to go next)

• Specific credit card offers and their exact terms (check individual card issuer websites).
• Detailed credit scoring models and how each factor is weighted (consult credit bureaus or financial advisors).
• Advanced debt management strategies like debt consolidation loans or debt management plans (explore options with credit counseling agencies).
• Tax implications of debt forgiveness or interest savings (consult a tax professional).
• International balance transfers (this guide is for US-based consumers).