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What Is a Balance Transfer?

What Is a Balance Transfer?

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This article was last updated Sep 23, 2020. Terms and conditions may have changed. For the most accurate information, please consult the issuer website.

If you have a large amount of high-interest credit card debt that you’re struggling to pay down, a balance transfer credit card can help by allowing you to move debt from one card to another with a lower interest rate, which — if done correctly — can potentially save you money on interest payments.

Here’s what you need to know about balance transfers to help you determine if one is right for you.

What is a balance transfer?

A balance transfer is the process of moving existing debt from one credit card to another credit card. Because balance transfer credit cards provide lower introductory interest rates, they can help you pay off your other high-interest credit card debt faster by allowing you to save on interest charges.

Interest charges on existing card debt can make paying the balance off more difficult as a portion of your monthly payment goes toward interest charges in addition to what you owe. With a balance transfer card, most if not all of your payment is applied to the principal rather than interest charges and the principal.

There are a number of balance transfer credit cards available that offer 0% intro APRs on balance transfers for anywhere from six months to 21 months —  meaning, you’ll have an extended amount of time to pay off your debt without incurring interest charges. Once the promotional period ends, the card’s regular balance transfer APR will apply to any unpaid portion of the transferred balance.

Before completing a balance transfer, there are a few things to keep in mind:

  • You cannot transfer balances between two cards from the same issuer. For example, you can’t transfer a balance from one Chase credit card to another Chase credit card.
  • You may be subject to balance transfer fees. The majority of balance transfer cards charge balance transfer fees; however, these cards typically offer longer intro APR periods. Balance transfer fees generally range from 3% to 5% of the amount of each transfer (which is added to the amount transferred). For example, if you transfer a balance of $8,000 to a card with a 3% balance transfer fee, a fee of $240 will be added to your balance. Still, the amount you can save on interest charges by transferring your balance can outweigh the cost of the balance transfer fee.
  • You must complete the transfer within the balance-transfer window to qualify for the intro period. Many balance transfer cards require cardholders to complete the balance transfer within 30 to 60 days of account opening to take advantage of a 0% intro APR period.
  • There is a limit on how much you can transfer. Typically, the amount you’re allowed to transfer will be less than the credit limit on your balance transfer card. The amount may also be determined by other factors, such as your creditworthiness and account history.
  • You generally need a good to excellent credit score to qualify for a balance transfer card. Some issuers allow you to check to see if you prequalify for a card before you formally apply, but know that even if you prequalify you aren’t guaranteed approval.

5 Options for When a Balance Transfer Credit Limit Isn’t Enough

How to choose a balance transfer credit card

To avoid having to pay interest charges once you do a balance transfer, it’s important to pay your transferred balance in full before the interest-free period ends. This can be helped by selecting a card with a lengthy 0% intro APR on balance transfers.

For example, the Citi Simplicity® Card - No Late Fees Ever gives cardholders a year and a half to pay off their transferred balance without incurring interest charges. The card offers an intro APR of 0% for 18 months on Balance Transfers. After that, a regular APR of 14.74% - 24.74% (variable) applies to any unpaid portion of the balance. Just know, the card also charges a balance transfer fee – either $5 or 3% of the amount of each transfer, whichever is greater.

While the majority of balance transfer cards charge balance transfer fees, there are cards available with no balance transfer fees. The Chase Slate® offers a 0% Intro APR on Balance Transfers for 15 months and an intro balance transfer fee of $0 for the first 60 days that your Account is open, after that, either $5 or 5% of the amount of each transfer, whichever is greater. Once the promotional APR period ends, an APR of 16.49% - 25.24% variable applies.

A balance transfer fee can make sense if the amount of credit card debt or the interest rate on the debt you are transferring is high enough that your interest savings will be substantial. But you should always do the math first to make sure you can cover the minimum payments required to pay off the balance within the promotional period.

For example, let’s say you have $10,000 in debt that you’re transferring from a card with a 22% interest rate. If you transfer that amount to the Citi Simplicity® Card , you can pay off the total balance (including the $300 balance transfer fee) in 18 months if you pay $573 each month, saving you approximately $1,831 in interest charges if you kept the balance on the old card and paid it off in the same 18-month period.

If you transfer that same balance to the Chase Slate® (which doesn’t charge a fee for transfers made in the first 60 days of account opening), you can pay off the balance within the 15-month promotional period by making payments of $700 each month for 15 months, saving you about $1,528 in interest charges.

To help figure out your best strategy to pay off your transferred balance, check out our balance transfer calculator.

How To Compare Balance Transfer Offers

How to do a balance transfer

After deciding upon a balance transfer credit card and receiving approval, it’s best to start the process of transferring your desired card balance as soon as possible. Just know, some issuers require your account to be open for a set period of time first. For example, Discover requires your account to be open for 14 days before a balance transfer can begin being processed.

To get started, gather information about the balance you want to transfer, including the credit card account number, the name and address of the bank and the amount of your current balance.

Next, call the number on the back of the credit card to which you want to transfer the balance, and complete the transfer over the phone. Or, complete the balance transfer online by logging in to your account, selecting your balance transfer offer and filling out the transfer request.

Some credit card issuers may also send balance transfer checks to you in the mail. These checks are similar to regular checks, but instead of withdrawing money from your bank account, they withdraw money from your line of credit to move your balance from one card to another.

Here are step-by-step instructions on how to complete a balance transfer with the major credit card issuers:

Once you request a balance transfer, it may take up to three weeks to complete. For example, with Chase, most transfers are processed within one week, but it may take up to 21 days.

Just know, it’s important to stay current on any existing credit card payments until you receive confirmation that your transfer has been completed.

What to do once your balance transfer is complete

Once your balance has been transferred, it’s essential to have a strategy to pay off the balance in full before the promotional period ends. This means calculating the amount you need to pay each month until the promotional period ends and setting up automatic payments to ensure you pay your bill on time each month. Otherwise, you will be subject to interest charges on your remaining balance — which may defeat the purpose of transferring the balance in the first place.

Plus, you risk losing the promotional offer if you pay late or miss a payment, which is another reason why setting up automatic payments is important.

Also, avoid charging new purchases on your card – which will ultimately add to your balance –until the entire transferred amount has been paid in full. And don’t start adding new debt to the card you transferred the balance from, as that may be tempting with the balance paid off or close to paid off.

Avoid These 7 Common Balance Transfer Mistakes

The information related to Citi Simplicity® Card - No Late Fees Ever and  Chase Slate® has been independently collected by CompareCards and has not been reviewed or provided by the issuer of this card prior to publication.


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