How to Transfer Credit Card Balance

A credit card balance transfer could be the solution you need to consolidate debt and pay it off fast.

High interest rates on credit cards make it tough to pay off debt. At 15% APR, more than half of every minimum payment you make is used to pay off monthly interest charges. At 20% APR, that jumps to two-thirds of each payment you make. As a result, you can make payments month after month, but never seem to get anywhere. Learning how to transfer credit card balances to another account can help you pay off debt faster. It can also help you save money.

How to transfer credit card balances step-by-step

Balance transfers can be an effective way to consolidate debt, if…

1. You owe less than $5,000 total to credit card companies.
2. You have a good or excellent credit score

If you can qualify for the right card with a long 0% APR teaser interest rate, then you can consolidate debt effectively using this solution. Here is what you’ll need and what you can expect with regard to how fast this solution will pay off your debt.

Required tool: Balance transfer credit card with a 0% APR introductory rate offer

Prep Time: 1-2 hours

Perform Time: 2 weeks

Total Time: 6-24 months

Fees: $3 – 3% of each balance transferred

Basically, it will take you a few hours comparing cards online to find the right card for your needs. You should receive your card within 7-10 business days, then you can work with customer service to begin transferring balances. Once your balances are transferred, you will have 6 to 24 months to pay off the balance in full before the end of the 0% APR introductory rate. That means you generally complete this debt solution within one to two years of consolidating your debt.

Step 1: Apply for the right balance transfer credit card

There are two things you want to look for when shopping for a balance transfer credit card:

1. Low balance transfer fees
2. The longest 0% APR teaser rate period possible

Most credit card companies offer teaser rate periods of 6-12 months. However, with excellent credit, you could find a card that offers an introductory rate period of 18 or even 24 months. These cards are rare, but worth the hunt. This maximizes how much time you get to pay off your debt interest-free.

If you’re using an online credit card comparison, it will show you different cards that fit your needs and credit profile. Only apply for the card that looks like the best fit for your needs. If you apply for multiple cards, you’ll create multiple credit inquiries, which can decrease your credit score.

Step 2: Get approved based on your credit score

Once you apply for the card you want, the credit card company will tell you exactly what they’re willing to offer, including:

1. The period of time you qualify for 0% APR after you first open the account
2. The credit limit on the card, which will determine how much debt you can transfer
3. The balance transfer APR that you’d pay AFTER the teaser rate period ends

The higher your credit score, the more favorable all of these terms will be. If you have a FICO over 800, then balance transfer terms should be in your favor. If not, then you may need to choose which debts you transfer. Our expert Laura Adams explains how to do this below.

Step 3: Once you receive your card, transfer your existing balances

In about 7-10 business days, you should receive your card. Then, you can activate it and begin transferring your balances. The easiest way to do this is to call the customer service department for your new balance transfer card. You give them the account information and balance of each debt you wish to transfer. Then they do the rest of the work for you.

Balance transfers can be used for consolidating a variety of debts. In fact, you can move more than just credit card balances.

You can transfer balances from:

• General-purpose credit cards
• Charge cards
• Store cards
• Gas cards
• In-store credit lines, such as for furniture or electronics
• Personal loans
• Auto loans

Just make sure you understand the cost of getting out of debt. Loans, especially secured loans like auto loans, tend to have lower rates than credit cards. So, if you transfer an auto loan balance to a transfer card and don’t pay off the balance before the 0% APR period ends, you could end up paying a lot more before you pay off that debt.

Also, be aware that each debt transferred will incur a balance transfer fee. This can range from $3 per transfer to 3% of each balance you move. This will be applied and rolled into the balance on your new card.

Step 4: Pay off the debt as fast as possible

Once you finish consolidating your debt, now it’s time to focus on the fastest repayment possible. Review your budget to cut any unnecessary expenses. This will maximize the cash flow available in your budget for debt repayment. Make the biggest payments possible each month. Your goal is to pay off the total consolidated balance before the 0% APR teaser rate ends.

If you don’t pay off the balance in-full before the 0% APR period ends, then the credit card company will apply your standard balance transfer APR to any balance remaining.

What to do when you need to prioritize balances for transfer

In some cases, you may not get approved for a credit limit that’s large enough to transfer all your balances. Or, you may get approved for a high limit, but a shorter 0% APR introductory period. This means you’d only have a small window to pay off the transferred debt. These are common challenges with balance transfers, even if you have good credit. If you run into either of these situations, then you will need to prioritize your balances and decide which ones you want to transfer.

This is a situation that Susan, a credit user in Tennessee faced when she applied for a balance transfer credit card.

I was approved for a 20-month balance transfer, but not for the entire amount that’s on my high interest cards. I have three cards open, and I want to transfer all of the highest APR debt and most of the second. The last card has 0% for 5 more months. So, how do I ensure that debt that I want to move gets transferred?

Credit expert Laura Adams responds…

Laura Adams from the popular Money Girl Podcast explains how to prioritize what you transfer by APR. She also explains why you might end up moving part of a balance if there’s a different APR applied. Here is her response:

Congratulations on getting such a credit balance transfer credit card offer! When used properly, you should be able to save a boatload of interest. But you have to make sure you do the transfers in order of highest to lowest APR. And realize that it’s common to have different interest rates applied to difference portions of a balance on the same card.

For example, on one card you might have the following types of annual percentage rates, or APRs, for different types of transactions:

• A new purchase balance for regular charges made on the card at 14% APR.
• A cash advance balance for money withdrawn from a bank or ATM at 26% APR.
• A balance transfer balance for debt shifted to the card from another card or credit account during a promotional period at 0% APR.

The Credit CARD Act has your back when it comes to transfers by APR

Adams explains that thanks to the Credit CARD Act of 2009, your monthly statements list each of the balances she describes above. In addition, aside from the minimum payment, which can be applied to any part of your balance as the credit card company sees fit, extra payments must be applied in order of APR. They must knock out your debt starting with the highest APR portion of your balance first.

This means you need to check your statements before you contact the customer service department of your balance transfer credit card. You’ll want them to transfer balances starting with the highest APR balance to the lowest.

That may mean that they end up transferring part of a balance, instead of the full amount. For example, let’s say you have two credit cards to transfer. One has an APR of 14% on a $5,000 purchase balance, but a $500 balance at 26% for a cash advance. Then you have another card at 20% APR with a $3,000.

If you get a balance transfer card with a $5,000 limit, you should transfer the $500 cash advance balance. Then you move over the full $3,000. Finally, you transfer $1,500 of the $5,000 balance that had the 14% APR applied rate.

Adams explains…

Your new account that’s offering the balance transfer promotion will send the funds to the old account, which shifts or transfers your debt. So, when you transfer a balance, it’s like making a payment and should be applied in order of highest to lowest interest rate

If you believe that your credit card company isn’t applying your payments in the right order, be sure to contact them for more information. If the issue isn’t resolved, you can file a creditor complain with the Consumer Financial Protection Bureau at consumerfinance.gov.

More questions about balance transfer credit cards