If you’ve recently gotten a low-rate balance transfer offer from a credit card company, you may be asking yourself, “Is a balance transfer something that will benefit me?”

A credit card balance transfer can be a great way to save money on higher interest rate debt. There are also other benefits that can come with consolidating your debts into just one payment.

If you have a high balance on a store credit card with a 21 percent APR, for instance, you may be able to transfer that debt to a credit card with a lower rate during the introductory period, saving you money on interest—and possibly helping you pay down your debt faster.

What is a Balance Transfer and is a Balance Transfer Credit Card Right for Me?

A balance transfer is when you pay off the balances on existing credit cards or loans by transferring them to another credit card account. (In some cases, you may be charged a fee to complete the balance transfer—typically a percentage of the transfer balance. More about that later.)

The amount you can transfer will depend on the issuer of your new card.

How Do Balance Transfers Work?

  • When you respond to a balance transfer credit card offer, you’ll indicate who you want to pay, the account numbers, and how much you want to transfer.
  • Once you’re approved for the balance transfer, the credit card company contacts your creditors or billers on your behalf and pays them the amount you indicated. It can take up to two weeks for this process.
  • If you have any payments due before that time, you’ll want to go ahead and make those payments by the due dates to avoid late fees.

When Should You Consider a Balance Transfer Credit Card?

It may be time to look into a balance transfer when you’ve piled up balances on multiple credit cards and it’s become hard to manage the payments with multiple due dates. There’s a lot to keep track of in life and consolidating this part of your finances gives you a few less things to worry about.

If you can find an introductory 0 percent balance transfer credit card offer and a lower overall APR, this may also be a good opportunity. The overall benefits and rewards of the card – more cash back or miles, for instance – could play into your decision.

On the downside, some credit cards will charge a balance transfer fee (read more about that in the next section).

You also don’t want to use a balance transfer credit card as a short-term fix. In other words, you don’t want to continue accumulating debt during an introductory period where you have an APR of 0% for a period of time, and then go right back to paying a higher rate with a bigger balance. 

It’s important to focus on the underlying causes of your credit card debt and how to pay it off.

How Much are Balance Transfer Fees Usually?

The typical balance transfer fee is 3 percent, according to Bankrate.

What are the Benefits of a Balance Transfer?

  • A low balance transfer APR can help you catch up on your existing debt. That’s because you can get a low promo or introductory APR to pay down that balance for a defined time frame, like 12 months.
  • A low promo or introductory APR may also help cut the time it takes to reduce your debt. When you pay high APRs, some of your payment goes to the interest rather than paying down the principal balance itself.
  • Finally, instead of paying multiple creditors on multiple due dates, consolidating all of your balances onto one card with a low or 0 percent promo or introductory balance transfer APR means you only have to keep track of one payment a month — and not multiple cards with multiple due dates.

What Types of Existing Debt can I Transfer to a Credit Card?

You can transfer the existing balances off of your store credit cards, gas cards and other cards. Just remember, when you are approved for a credit card, you will be given a certain limit and you can only transfer up to that amount – be sure to account for any balance transfer fees.

What Types of Balance Transfer Credit Card Offers and Fees are Available?

Credit card companies offer incentives—like a low introductory interest rate on purchases and balance transfers — to encourage you to transfer your business to them, and hopefully establish a long-lasting relationship. 

The best balance transfer rates could be offered by credit card companies to new cardmembers, and usually are 0 percent or low APR offers for an introductory time period.

When transferring your credit card balance, it is important to remember that this intro rate is temporary.

Balance transfer credit card offers are sometimes available on existing credit card account(s) with promotional APRs, which also apply for a defined time period. Contact your credit card company for more details.

When Will I Begin to Pay the Standard Balance Transfer Fee?

You’ll pay your standard purchase APR on balance transfers when: 

  • Your introductory or promotional time period expires. After this period, the remaining transferred balance is generally subject to the standard purchase APR for the card. 
  • If you want to make a balance transfer to an existing card and don’t have a promotional balance transfer offer, you may be able to pay the standard APR for balance transfers as disclosed in your Cardmember Agreement.

Are Balance Transfer Credit Cards with No Fee or 0% Balance Transfer Credit Cards a Good Idea?

  • Avoid “chasing” 0 percent balance transfer credit card offers — or bouncing balances from one card to another. Consider finding a great balance transfer offer and making a plan to pay down the debt once and for all.
  • Determine whether the Intro APR offer applies only to the balance transfers, regular purchases, or both. Check to see if there is an introductory balance transfer fee as well.
  • Balance transfers by themselves do not automatically close an account. If you want to close a credit card account after you transfer the balance from it, you need to contact the creditor to do so.

Originally published February 17, 2015

Updated January 13, 2020

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