When you initiate a balance transfer, you’re essentially using your new credit card to pay off the balance on your old account. Then you may begin to pay down the balance amount, plus any balance transfer fees, on your new card.
If the credit card has a 0% interest promotion for balance transfers, the balance won’t accrue interest until the introductory period ends, sometimes more than a year after account opening.
You may complete a balance transfer in a few simple steps.
- Compare cards. Consider how much each card charges in balance transfer fees and how long the intro period lasts, as that’s how long you’ll have to pay the entire balance without an interest charge. If you plan on using the credit card after paying off the balance, you may also want to compare rewards and other features.
- Apply. When you find the right card, submit an application. You may have to meet certain credit score and income criteria.
- Initiate the transfer. Many credit card issuers allow you to request the transfer online, over the phone, or in person if there are branch locations. Prepare to provide information about your other account, like the lender and account number, as well as the amount you want to transfer.
- Make payments. When the 0% APR introductory promotion ends on your new card, the remaining balance begins to accrue interest at the standard rate. To pay your debt off before interest kicks in, you may have to pay more than the monthly minimum. If you only transfer part of your balance, don’t forget to keep making payments on your old credit card, too.
You might want to keep your old account open after transferring or repaying the balance. When you close an account, you lower the amount of available credit you have, which may hurt your credit score. But if your old credit card account has a high annual fee or keeping it open tempts you to overspend, it may be better to close it anyway, or at least get rid of the physical card.
