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Is a Credit Card Balance Transfer a Good Idea or Not Worth It? contents
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A credit card balance transfer could help you save money on interest and pay down debt.
Consolidating credit card balances may lower your monthly payment.
When considering a balance transfer, factor in the cost of fees and other details in the APR offer.
Credit card debt may be a nuisance to your wallet and your credit score, especially if the interest on the card is high. If you’re weighing your options for paying down your credit card debt, you may have considered a balance transfer to a lower-interest credit card. But whether a credit card balance transfer is the right decision for you depends on many factors, from your existing credit card balance to the fee for transferring a balance, and more.
A credit card balance transfer lets you transfer part or all of your balances from one or more credit cards to another. Credit card companies may give you a balance transfer offer, such as a low or 0% intro annual percentage rate (APR) on the balances that you transfer to the card for a limited time after account opening. If you don’t repay your balance within the low APR period, your balance should begin accruing interest.
Using a promotional interest rate offer may help you save money and pay off your debt faster if you transfer high-interest debt. But you’ll want to compare how much you can save to any potential fees and consider how you’ll manage your cards once the transfer is complete.
A credit card balance transfer may affect your credit score in a few different ways.
You may see a dip in your credit score shortly after you apply for a balance transfer credit card offer, as a new card usually comes with a hard inquiry. But a credit card balance transfer may improve your credit score in the longer term if it helps you manage your debt.
If you open a new card without closing your old account, your available credit should increase. This may decrease your credit utilization, improving your score. As you continue paying down your transferred balance, your credit utilization should continue to shrink (as long as you don’t increase your spending).
A balance transfer may hurt your score if you fall behind on payments. Typically, a balance transfer credit card offer has a lower interest rate in the months after account opening. If you don’t repay your balance before the low APR period ends, you may end up with more debt, which could hurt your credit score.
Consider the advantages and disadvantages of using a balance transfer before applying for a new credit card or requesting a transfer.
Here are some reasons why you might consider a balance transfer credit card offer:
Consider the following disadvantages before you initiate a balance transfer:
Sometimes, a balance transfer card offer is the right tool for managing high balances. In the following scenarios, you may want to consider credit card balance transfers.
Many credit card issuers charge a fee for credit card balance transfers. However, depending on the specific balance transfer credit card offer, interest savings may offset fees. If you think a balance transfer might be a good choice, take the time to compare the length of promotional periods, APRs, and balance transfer fees to find the best credit card balance transfer card offer for you. Keep your current balances in mind, too.
Sometimes the math might be surprising. For example, an offer with no balance transfer fee and a low interest rate might wind up saving you more money than an offer with a balance transfer fee and 0% APR.
Easily calculate your potential savings with a Discover® balance transfer offer. Simply enter your current balances (totaling up to ), APRs, and how much you pay each month.
Enter your current balance. Your total balances need to be between $500 and .
Enter an APR amount between 1% and 30%.
Enter your monthly payment.
Discover Card
Current Card(s)
Ready to save on interest with a balance transfer from Discover?
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Interest with your current card(s) (--% APR)
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Interest with a Discover Intro APR for months (0% APR)
$0 .
Discover balance transfer fee ()
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Estimated savings with Discover
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Legal Disclaimer: The articles and information provided herein are for educational purposes only and are not intended as a substitute for professional advice.
*Estimated Savings Calculation Assumptions
High-interest debt can be difficult to get under control–even if you make significant payments each month, your balance may continue to grow. It can be frustrating to take a look at your mobile banking app after making a payment to find that, because of interest charges, you’ve barely begun to chip away at your balance.
If your credit card’s interest rate is the primary reason you’ve struggled to pay down your existing credit card balance, a balance transfer might be the solution you need. A credit card that offers a low introductory APR might ease some of your stress and make it easier to get back on track without worrying that each interest charge could set you back.
It’s important to have a plan for repaying your balance within your card’s promotional period. Otherwise, it could begin to accrue interest at your new card’s standard rate.
Maybe you plan to redirect a percentage of every deposit from your checking account to your credit card balance. Or perhaps you intend to stop eating at restaurants and put the money you save toward your balance instead. Make sure your plan makes sense for your budget and family finances—you likely don’t want to cut into necessities like housing costs, groceries, or retirement planning.
Consolidating multiple credit card balances by transferring them to a single credit card may streamline your bills and save you money. Depending on the terms of your balance transfer card, you may even transfer money from an outstanding personal loan. However, you might have to make larger payments after debt consolidation if you want to pay off the balance before the end of the promotional period.
Did you know?
When you apply for a Discover® Card that offers balance transfers, you could enjoy a low intro APR as a new cardmember.
Balance transfer credit cards may offer perks and rewards that make them a good fit for your everyday spending. You may be able to choose a balance transfer option with credit card rewards that line up with your shopping habits. In that case, you may want to keep using the card for regular purchases after you’ve repaid the existing balance.
Even if a balance transfer card has a lower interest rate than your old card, a high annual fee might limit the amount you can save. A card with no annual fee could help you maximize your savings and pay down your balance faster.
While, under the right circumstances, a balance transfer can be helpful, it might not be the right fit in the following situations:
Before you apply for a balance transfer card, it’s a good idea to check your credit report and credit scores. The best balance transfer card offers typically go to people with good or excellent credit scores. If your credit isn’t as strong, you may not qualify for a low enough introductory interest rate to make your balance more manageable.
Overspending doesn’t always mean lavish shopping sprees. One or two big purchases on your old or new card may leave you deeper in debt. Closing your higher-interest account after transferring the balance may remove some temptation, but it may hurt your credit score. If opening a new credit card account doesn’t seem like the best credit card debt relief solution, you may consider a personal loan or home equity loan to consolidate debts instead, depending on your unique circumstances.
You usually have to pay more than the required monthly minimum to repay a large balance within a credit card’s promotional APR period. However, you may not always have room in your budget for a higher credit card payment. If you can’t repay your balance in full before the end of your promotional period, it may accrue interest at the standard rate, which may leave you back where you started.
If you can repay your debt within a few months, your interest savings on a balance transfer may not be worth the fees and the hassle. Your credit card issuer, bank, or credit union may offer a debt calculator on their online banking portal that can help you determine whether you may benefit from a balance transfer.
A credit card balance transfer can make it easier to manage some balances. However, it’s not always the solution if your debts have grown completely out of control. If you have multiple high debts, you may be limited by the card’s balance transfer limit, which could be lower than its credit limit for purchases. And if you’re considering a new credit card, you won’t know this limit until after you apply. Plus, a balance transfer doesn’t necessarily address the circumstances that contribute to overwhelming debt. If you feel completely overwhelmed by debt, a reputable credit counselor may help you get back on track and achieve your financial goals.
Balance transfer credit card offers may not completely solve your debt problems. However, in the right circumstances, they can be helpful tools for managing high balances. If you have a strong credit score and a plan for repaying your balance before the low APR offer ends, a balance transfer offer could help you overcome your credit card debt and take a step toward your financial goals.
Pay off debt faster with a Balance Transfer
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