Adam McCann, Financial Writer
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Balance transfers work by allowing you to use a credit card to pay off an existing debt, which moves the debt to the card’s balance, sometimes with an additional fee. The cardholder then owes the debt to the credit card issuer and must make monthly payments until it is paid off.
How a Balance Transfer Works
- Application: The person with the debt applies for a new credit card, if they do not already have a balance transfer credit card they want to move the debt to. It can take a week or more to get a credit card.
- Transfer request: The cardholder requests a balance transfer from the issuer of the card they want to transfer the balance to, usually through their online account or over the phone. You can also apply for a balance transfer when filling out a new credit card application. It's worth noting that you will need to specify a certain dollar amount that you want to transfer, and your balance transfer card’s issuer may or may not grant a transfer for the full amount.
- Waiting period: It’s typical for a balance transfer to take around 14 to 21 days to process, especially if you’re applying for a new card. During that period, the cardholder should continue making payments on the original debt to avoid penalties. Any payments made will be subtracted from the amount that needs to be transferred.
- Transfer: The issuer of the balance transfer credit card pays off the cardholder’s original debt (or a portion of it if it’s a partial transfer). This effectively moves the debt to the balance transfer credit card.
- Increased balance: The balance on the credit card will increase by the amount of debt transferred, plus a balance transfer fee if the card has one. A balance transfer fee is usually 3% or 5%, but some cards have no balance transfer fee.
- Payoff: The cardholder must make at least their required minimum payment each month until the debt is fully paid off. If the card has a 0% introductory APR, it’s best to pay the balance in full before this period expires to avoid interest.
You can learn more about balance transfers on WalletHub, as well as check out WalletHub’s editors’ picks for the best balance transfer credit cards.
2023's Best Balance Transfer Credit CardsCompare Cards
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