Credit Card Balance Transfer Tips

Do one thing: Before you apply, compare what the transfer fee costs with what you pay in interest each month. If the fee is smaller, a balance transfer may be worth a closer look.

A balance transfer can give you breathing room when high-interest credit card debt feels stuck. You move your balance to a new card with a low or 0% intro rate, so more of each payment goes toward what you owe. However, the savings depend on doing it the right way. These steps walk you through the whole process.

Check Whether a Balance Transfer is Worth It

Start with simple math to see whether a balance transfer would save you money. Most cards charge a fee of about 3% to 5% of the amount you move. Then compare that fee with the interest you’re paying now.

For example, say you owe $4,000 on a card with a 24% APR.

• That works out to about 2% a month, or roughly $80 in interest in a single month.
• A 3% transfer fee would cost $120 one time.
• In other words, the fee is less than two months of interest, so a 0% offer that lasts a year or more could save you a lot.

On the other hand, a transfer may not help if your balance is small, if you can’t qualify for a good offer, or if you can’t pay down much before the intro rate ends.

Pick the Right Balance Transfer Card

Once the math checks out, compare a few balance transfer offers. Here are some things to look for:

• Long intro period. Promotional rates must last at least six months, but longer gives you more time.
• Low transfer fee. Small differences add up on a large balance.
• No annual fee, if possible.
• Reasonable regular APR. That’s the rate you’ll pay on anything left after the intro period.
• Different financial institution. You usually can’t transfer a balance between two cards from the same issuer.

These offers usually go to people with good credit. Many issuers let you check whether you prequalify without affecting your credit score, so try that before you apply.

Apply and Request the Transfer

Many cards let you request a balance transfer during the application. Otherwise, you can do it from your new account online. Have your old card’s account number and the amount you want to move ready.

Keep two limits in mind with a balance transfer.

• First, your new credit limit may be lower than your balance, and the fee counts toward that limit too.
• Second, you often need to request the transfer within a set window, such as 60 days, to get the intro rate.

Keep Paying Your Old Card

This step is easy to miss. A credit card balance transfer may take up to 21 days or more to go through. Until it does, your old card still has a balance and a due date.

So keep making at least the minimum payment on your old card. Otherwise, you could face a late fee or a missed payment on your credit report while you wait.

Confirm the Transfer

You may not get a notice when the transfer finishes. For that reason, check both accounts. Your old card should show a zero balance, or close to it, and your new card should show the transferred amount plus the fee.

Pay Off the Balance Before the Intro Rate Ends

Now the real work starts, since a balance transfer pays off best when you use the intro period to pay the debt down.

• Divide your new balance, including the fee, by the number of months in your intro period.
• This is your monthly target.
• Set up autopay for at least the minimum so you never miss a payment.
• Also, try to avoid new purchases on the new card.

If purchases don’t get the intro rate, they may collect interest right away. For more on how intro rates work, read what to know about 0% APR intro rate cards.

Don’t Run Up the Old Card Again

After a balance transfer, your old card has room on it again. That can be tempting. Still, adding new charges means you’d be paying down two balances instead of one.

It’s usually best to keep the old card open but unused. An open card with a zero balance helps keep your credit utilization low.

How a Balance Transfer Affects Your Credit

Applying for a new card usually adds a hard inquiry to your credit report. According to TransUnion, hard inquiries are typically one of the least influential credit score factors. Meanwhile, the new account adds to your total available credit, which can help your utilization as you pay the balance down.

A balance transfer is one tool among several. If it doesn’t fit your situation, see other ways to pay off credit card debt, including what to do if you’re struggling to make minimum payments.