How a balance transfer works, step by step
Key points
- A balance transfer moves debt from one card to another, usually to get a 0% intro APR for a set period.
- You normally pay a one-time transfer fee of 3% to 5% of the amount moved.
- It only pays off if you clear most of the balance before the intro period ends.
A balance transfer is one of the most effective ways to cut the interest on credit card debt, and one of the easiest to get wrong. Here's how the process works from start to finish, with the math that tells you whether it's worth it.
How it works, step by step
- You apply for a card with a balance transfer offer. The offer is usually a 0% intro APR on transferred balances for a fixed number of months or billing cycles. See the longest offers we track.
- You request the transfer. You give the new issuer the account number of the old card and the amount, either while applying or later in your online account. Most offers require the transfer within a window, often 60 days to 4 months after opening the account.
- The new issuer pays off the old card. This can take from a few days to a couple of weeks. Keep paying the old card until the transfer shows as complete, or you risk a late payment.
- The fee is added to your new balance. Move $6,000 with a 3% fee and you start with $6,180 on the new card.
- You pay it down during the intro period. You still owe at least the minimum payment every month.
- The intro period ends. Whatever is left starts accruing interest at the card's regular APR.
Is it worth it? A worked example
Say you owe $6,000 at 24% APR and can pay $300 a month.
| Stay on current card | Transfer: 0% for 21 months, 3% fee | |
|---|---|---|
| Upfront fee | $0 | $180 |
| Interest paid | about $1,740 | $0 if paid off within 21 months |
| Total cost of borrowing | about $1,740 | $180 |
At $300 a month the $6,180 balance is gone in 21 months, so the transfer saves about $1,560. To clear it in time you need at least $6,180 ÷ 21 = $294.29 a month. Pay less and the remainder starts costing the regular APR. Run your own numbers in the balance transfer calculator.
Rules and limits to know
- Same-bank transfers usually aren't allowed. You generally can't move a balance between two cards from the same issuer.
- Your credit limit caps the transfer. If you're approved for a $4,000 limit, you can't move $6,000, and the fee counts toward the limit too.
- New purchases can cost interest. On many cards, carrying a transferred balance means new purchases don't get a grace period. Keep using a different card, or none, for spending.
- Payment allocation. Under the Credit CARD Act, payments above the minimum generally go to the balance with the highest APR first, which helps if you also have purchases on the card.
- A late payment can end the offer. Check the card's terms; some issuers can cancel the intro rate after a late payment. Set up autopay for at least the minimum.
Common mistakes
- Not having a payoff plan before the intro period ends.
- Running the old card back up after it's paid off.
- Forgetting to include the fee when comparing offers.
- Making the transfer after the window closes, when the intro rate may no longer apply.
Sources
- CFPB: Credit cards
- Credit Card Accountability Responsibility and Disclosure Act of 2009
- Issuer terms for the offers listed on our best balance transfer cards page
Frequently asked questions
How long does a balance transfer take?
Usually from a few days to about two weeks. Keep paying the old card until the transfer shows as complete.
Does a balance transfer hurt your credit score?
Applying for a new card adds a hard inquiry, which can lower your score slightly for a short time. Over time, a lower balance and more available credit can help your utilization.
Can I transfer a balance to a card from the same bank?
Generally no. Most issuers only accept transfers from cards issued by other banks.
