Balance Transfer Guide

A balance transfer works by allowing you to move your existing debt to the card's balance, therefore helping you to use a credit card to pay off an existing debt. 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

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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.

Yes, a balance transfer is a good idea if you need months to pay off high-interest debt and you are able to qualify for a 0% balance transfer credit card deal. Most balance transfer cards require a 700+ credit score, and most also have high regular APRs, making it important to repay what you owe before the 0% period ends.

What you should know before making a balance transfer:

• You generally need good credit or better to get a 0% balance transfer credit card. Most balance transfer cards have very high regular APRs, making it important to repay what you owe before the 0% period ends.
• You'll also want to make sure the new card's balance transfer fee is as low as possible. The average balance transfer fee is 2.55%. However, sometimes there are credit cards that have both 0% APR on balance transfers and no balance transfer fees.
• You should use a balance transfer calculator to compare the cost of repaying what you owe with your current card versus taking advantage of the best balance transfer offers. 

If you'd like to know where you stand before applying for a balance transfer card, check your latest credit score for free on WalletHub. 

The pros of balance transfers include saving money on interest, consolidating debt, and possible improvement in credit score in the long run. The cons of balance transfers include balance transfer fees, high regular APRs, and above-average score requirements. Generally, when you transfer a balance, you're shifting high-interest debt to a credit card with a lower interest rate.

Pros and Cons of Balance Transfers 

Balance Transfer Pros

Save money on interest.
Many credit cards offer a 0% APR on balance transfers, and the average introductory rate lasts for 13 months. The best cards might even offer an intro APR for 21 months. Currently, the average regular APR among new credit card offers is 22.15%.  

So, if you transfer your balance from a high-interest credit card to a card with a low introductory APR on balance transfers, you will have the opportunity to save on interest charges. To make the most of your balance transfer card, make sure to pay down as much of your balance as you can during the intro period. Keep in mind that the remaining balance will be subject to the card's regular APR. 

Consolidate debt.
If your credit limit allows it, you may be able to combine multiple credit card balances by transferring them to a balance transfer card. This way, you'll need to make just one credit card payment every month. This strategy can make it easier to manage your payments.

Possible credit-score improvement in the long run.
A balance transfer card can help you decrease your credit utilization ratio, which will improve your credit score in time. When you open a new card for the purpose of transferring a balance, you will increase the amount of credit you have available every time you make a payment, which can lower your credit utilization ratio. For the credit utilization to go down, make sure to not incur any more debt in the meantime. 

Better features and perks.
If your current credit card offers limited benefits and a high interest rate, transferring your balance to a new card might be a better idea. Many balance transfer cards also offer rewards and no annual fees. Some credit cards offer intro APRs on new purchases as well. If you are a frequent traveler, you may also get a balance transfer card with travel benefits and no foreign transaction fees. 

Balance Transfer Cons

Balance transfer fees.
When you're transferring a balance to a credit card with a low introductory APR on balance transfers, you will most likely be charged a fee. Transfer fees on credit card offers currently average 2.55% of the amount transferred. No balance transfer fee credit cards are rare and usually require excellent credit for approval. 

High regular APR.
Balance transfer cards usually come with high regular APRs. So, before transferring a balance, make sure to choose a card with an intro APR that gives you enough time to pay down your balance before the intro rate expires. Otherwise, your remaining balance will be subject to a high regular APR. It's also worth using a balance transfer calculator to plan out the necessary payments and estimate your savings.

Above-average score requirements.
Most credit cards with balance transfer offers require good to excellent credit for approval. This is also the case for credit cards with a low regular APR. So, if you have fair credit or lower, it will be hard to find a worthwhile balance transfer card. Students are a noteworthy exception as they can get approved for credit cards with great balance transfer deals even with limited credit.

The risk of building more debt.
A new credit card will result in a higher total credit limit, and if you don't use your credit card responsibly, this may lead to building more debt. So, you have to be disciplined enough not to make purchases on your old credit card. If you're having trouble managing your spending, it might be better to close your old credit card account after transferring your balance. However, doing so may impact your credit score.

Possible drop in credit score for a short period of time.
When you apply for a new credit card, this will result in a hard inquiry which may temporarily drop your credit score by a few points. You can get an idea of how much a hard inquiry will affect your credit score by using WalletHub's free credit score simulator.

Ultimately, if you consider all the pros and cons and decide a balance transfer is right for you, the next step is choosing a balance transfer card. There are many cards on the market, but some are better than others. It's important to do your research and choose the card that best suits your financial needs. 

Best Balance Transfer Credit Cards in 2023

Alternatives to Balance Transfer Credit Cards

If you're not convinced that getting a balance transfer card is the right call, there are other ways to pay down your debt. For instance, using a debt consolidation loan might be a better fit if you qualify for a competitive interest rate and a large enough loan. Factors such as your credit score, income, and existing debt play a significant role in determining your interest rate and loan amount. 

Yes, you should do a balance transfer if it will save you money. To determine whether a balance transfer is a good idea, use a balance transfer calculator. That way, you can compare the cost of sticking with your current card to the savings available from the latest balance transfer offers. You will also need good credit or better to qualify for the best balance transfer cards. If you don't know where you stand, you can check your credit score for free, right here on WalletHub. 

Doing a balance transfer means using a new credit card to pay down existing debt from another credit card or loan. A transfer should save you money on interest and enable you to pay off your debt faster. But if you're not careful, you could wind up with even more debt and a higher interest rate than you started with.

When You Should do a Balance Transfer

• Your credit is good or excellent: A credit score of 700+ is typically required to get a balance transfer credit card with a 0% APR.
• You have moderate debt: The best balance transfer cards have minimum credit limits of $500 - $1,000. But the issuers will offer higher credit limits to people with higher credit scores. If you have a lot of debt, you may only be able to transfer part of what you owe.
• You take fees into account: Balance transfers cost you a percentage of the total debt transferred, usually 3% to 5%. That fee gets added to your balance on the new card. So, the balance plus the fee must be less than or equal to your credit limit on the new card. There are a few cards that do not charge a transfer fee.
• You have a payoff plan: Figure out what monthly payments you'll need to make in order to pay off the balance by a target date. Aim to pay in full before any low intro APR period ends, given that regular rates are often above 20%.
• You have a separate credit card for new purchases: When you charge a new purchase to a balance transfer card, it's subject to the card's purchase APR. And there's not always a low intro APR for purchases, even when a card offers 0% balance transfers.

If you decide that you should do a balance transfer, make sure to shop around for the best offer. Take a look at the best balance transfer credit cards and compare their terms to see which one fits your needs.

Once you do a balance transfer, you may be tempted to apply for another balance transfer card when the introductory APR on your current card expires. That may sound like a good plan to avoid paying interest, but it's easy to rack up more debt than you can afford. Plus, 0% APR balance transfers aren't always available.

The best way to do a balance transfer is to apply for a new credit card with a low balance transfer APR and low fees. If your balance transfer credit card application is approved, the new card's issuer will pay your original creditor for the amount transferred. You will then owe that amount, plus a balance transfer fee of 0% - 3%, to the balance transfer card's issuer. If you repay the full amount of your balance transfer before the new card's high regular APR takes effect, you could save a lot of money on finance charges and get out of debt sooner.

Keep in mind that balance transfers can take a while to process, as long as six weeks in some cases. So, it's important to keep making payments to your original creditor until the transfer goes through. Otherwise, you risk late fees and credit score damage.

How to Do a Balance Transfer in 6 Steps

1. Check your credit score

Balance transfer credit cards with 0% APRs usually require good credit or better for approval. Knowing your credit score will make it easier to compare relevant credit card offers.

2. Find the best balance transfer card for you

Compare cards based on their balance transfer APRs, balance transfer fees, and annual fees. Also, consider how much you can afford to pay each month. Using a balance transfer calculator can help.

3. Apply for your balance transfer card

Fill out the application with your personal and financial information, including the section of the application for requesting a balance transfer. Provide the account number and the amount you want to transfer to make the request. It's best to ask for a balance transfer when you apply because promotional 0% APR periods start as soon as the account opens.

4. Keep making payments

Keep up payments to your original creditor until the balance transfer goes through, or you could be marked as past-due. You will be credited for any payments made during this period after the transfer gets processed. 

5. Receive a decision

The issuer may allow you to transfer the full amount that you request or offer to transfer part of the balance instead. Or, your balance transfer request could be denied, depending on your creditworthiness and available funds. It may take a few weeks to get a decision.

6. Pay the rest of the balance

Try to pay off a transferred balance before your new credit card's low introductory APR expires. A high regular rate will apply to any balance remaining at that time. If you still have a balance on your original account, continue repaying that as well.

It's also good to note that you can transfer multiple balances to the same credit card. But that can lead to paying a lot in balance transfer fees and interest if you're not careful. In any case, finding the best credit card for your needs is how you'll save the most money doing balance transfers.

Some of the Best Balance Transfer Credit Cards

Now that you've learned how to do a balance transfer, you're on your way to saving money on interest and getting out of debt. For more tips and info, check out WalletHub's in-depth balance transfer guide. You can also take a look at our editors' complete picks for the best balance transfer credit cards on the market to weigh your options.

A balance transfer is a credit card transaction that involves using a card to pay a debt owed to another lender in order to move the debt to the balance transfer credit card. The main purpose of a balance transfer is to get a lower interest rate, save money and repay the debt sooner.

Key Things to Know About Balance Transfers

• What It Is: A balance transfer moves an existing debt to a credit card.
• Benefits: A balance transfer can get you a lower APR and/or more time to pay a debt off.
• Types of Balances Transferable: This depends on what your issuer allows, but may include balances from credit cards, auto loans, student loans, mortgages, HELOCs, small business loans and payday loans.
• How Long It Takes: A balance transfer typically takes around 15 to 25 days to process. During that time, you should continue making payments on your original debt.
• Introductory APRs: The best balance transfer credit cards have introductory 0% APRs for as long as 21 months. If you pay your balance in full during that time, you owe no interest.
• Fees: Some credit cards charge a balance transfer fee, which gets added to the balance you owe. This fee is typically either 3% or 5% of the amount transferred, but some cards have no balance transfer fee.

You can learn more about balance transfers on WalletHub, as well as see WalletHub's editors' picks for the best balance transfer credit cards.

Balance transfers do hurt your credit when you open a new credit card account to do the transfer. Applying for a balance transfer credit card will generate a hard inquiry on your credit report, causing a slight dip in your credit score.

If you transfer a balance to an existing credit card account, however, there is no hard inquiry and no credit score damage. A balance transfer could still result in high credit utilization, though, and allow you to rack up more debt than you can afford to repay. Both of those things can hurt your credit score.

You can use WalletHub's free credit score simulator tool to get a sense of how a balance transfer might affect your credit score.

How Balance Transfers Can Hurt Your Credit Score

Credit Inquiries

If you apply for a new balance transfer card, the resulting hard inquiry will likely cause a slight dip in your credit score for up to 12 months.

Lower Account Age

Adding a new balance transfer card will reduce the overall age of your accounts, which can have a slight negative impact on your score.

Increased Utilization

Keep an eye on how the transfer affects your account's credit utilization. Making a transfer will usually add 3%-5% to your debt due to balance transfer fees. If your utilization is over 30% of your credit limit, that's not good for your score.

Missed Payments

If you don't continue to make payments to your original creditor while the balance transfer is being processed, your credit score will suffer. Balance transfers can take up to three weeks, or be completed in just a few days, after you make a request or apply for a card.

How Balance Transfers Can Help Your Credit Score

Reduced Utilization

If you leave your old credit card(s) open, adding a new card will reduce your utilization ratio across all accounts, assuming no additional spending. The utilization on the card you transferred the balance from will drop, and it will increase on the card you transferred the debt to.

Low Interest

Balance transfer cards often have 0% introductory APRs. This gives you the chance to pay off your balance faster, since the full amount of your payments will go to the principal rather than interest. This is good for your score long-term.

Less Debt

A balance transfer can help you reduce your debt load. That's important because how much debt you owe is a key ingredient in your credit score. The less, the better, since people with little-to-no debt are in a more stable position financially.

Bottom Line

Balance transfers won't hurt your credit by themselves. But they affect other elements of your credit that could bring your score down a little temporarily. Still, the benefits will outweigh the negatives in the long run, as long as you plan to repay most, if not all, of your balance during your card's low introductory APR period.

Where people get into trouble is trying to use a balance transfer to support unsustainable spending habits, thinking 0% balance transfer credit card offers are always available. They're not, and learning that the hard way is a very expensive mistake. So make sure to use a balance transfer calculator to make a payment plan.

Yes, it is worth it to transfer a balance because it is an excellent way to refiannce existing credit card debt. If you can get a lower interest rate in the process it will save you money and help you pay off the debt sooner. For example, transferring a balance with a high APR to a 0% balance transfer credit card could save you a lot of money even if the card has a balance transfer fee.

A lot depends on the card you're able to qualify for, how much you owe, and how much you can afford to pay per month. Fortunately, you can use a balance transfer calculator to put it all together and see how much money a balance transfer could save you. You can also consult the list below to confirm whether each item is true in your situation.

It's Worth Transferring a Balance If:

• You are transferring the balance to a credit card with a lower interest rate.
• You would pay less in combined interest and fees than you are paying currently.
• You need more time to pay off your balance.
• You have good or excellent credit (typically needed to qualify for a 0% APR balance transfer credit card).
• You plan on paying off the balance before the end of the 0% or low APR introductory period.

If you do decide a balance transfer is worth it for you, there are many great balance transfer credit cards that offer 0% introductory rates and even some that offer no balance transfer fees as well. Check out WalletHub's editors' picks for the best balance transfer credit cards to find the right one for you.

When you transfer balances on credit cards, what happens is that the new credit card's issuer pays your original creditor for the amount transferred. Once the balance is transferred, you will owe your debt to the issuer of the balance transfer card. You can transfer most types of debt to credit cards, including balances from car loans, student loans, HELOCs, mortgages, and other credit cards. Not all issuers allow all types of transfers, though. Plus, the amount you transfer cannot exceed your new card's balance transfer limit, which may or may not be the same as the overall credit limit.

People usually transfer a balance on a credit card to take advantage of lower interest rates, especially 0% APR transfer offers. These give you a certain number of months after account opening to repay your balance without interest. However, transferring a balance usually involves a fee: 3% to 5% of the amount transferred is the norm.

Here's what happens when you transfer a balance on a credit card:

1. The card issuer transfers funds: Once your transfer application is accepted, the card issuer will typically send a check to the old credit card or loan issuer.
2. The debt moves to a new issuer: You now no longer owe the balance to your old creditor. Instead, you owe it to the issuer of the balance transfer card. Ideally, the card should have a lower APR.
3. The card issuer charges monthly payments: Your monthly statement will tell you the minimum you must pay to keep your account in good standing, but it's best to pay off as much as you can each month. Try to pay off your entire balance by the end of any 0% intro period, or you'll owe interest.
4. Interest accrues: Ideally, your balance transfer card will have a long 0% interest period. But once that period ends, you will owe interest at the card's regular APR on any balance that remains. Interest compounds daily.

When selecting a balance transfer credit card, look for an APR that will lower the overall cost to repay your debt. Consider any introductory rate and how long it will last, along with the regular APR, how long it will take you to pay what you owe, and the fees involved.

If you're transferring multiple debts, be aware that each may incur its own transfer fee. You should also be sure to check your credit score and only apply for a card with good odds of approval. Applying for a new card will make your credit score dip temporarily.

Once you request a balance transfer, remember to keep making payments on your old loan or credit card while your transfer processes, so that you aren't marked as late.

When you transfer balances on credit cards, your goal should be to save money while getting debt-free sooner. There may be fees, and applying for new cards gives your credit rating a small hit. But in the long run, the potential to pay off your debt faster can help your score and your wallet overall.

Yes, balance transfers are worth it because they are a very good way to refinance existing credit card debt. This can save you money by getting you a lower interest rate, preferably 0% for a certain number of months. A balance transfer is most likely to be worthwhile if you have good credit or better, you qualify for one of the best balance transfer credit cards, and you use the savings to get out of debt faster. Transferring a balance should not be an excuse to overspend.

If you'd like to estimate how much you could save with a balance transfer, you can use WalletHub's free balance transfer calculator.

When Balance Transfers Are Worth It

1. When they save you money

   You should always aim to transfer a balance to a credit card that has a significantly lower APR than your current credit card or loan. There are credit cards with 0% introductory APRs for a certain number of months, which are generally available to people with good or excellent credit. It's also ideal to get a card with a low balance transfer fee, though an especially long 0% period can offset a higher fee.

2. When they won't tempt you to spend more

   If the balance you're transferring is from another credit account, the transfer frees up the credit line on that account, allowing you to spend more. If you're not careful, you could end up increasing your debt to unmanageable levels.

3. When other debt payoff options aren't better

   There are a number of other ways to pay off debt, like taking out a personal debt consolidation loan or tapping into your home equity. You should explore multiple options and their costs before deciding on one.

4. When you have a solid payoff plan

   Before you make a balance transfer, you should have a plan for how much money you will put aside each month to pay it off. Ideally, you should pay off the full balance or as close to it as possible during the card's introductory APR period, if it has one.

In many cases, a balance transfer will be worth it, but there are also some situations where it won't be. You can learn more about the pros and cons of balance transfers on WalletHub.