How to Transfer Credit Card Balances

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High interest rates make it tough to pay off credit card 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.

What you need: Balance transfer credit card with a 0% APR introductory rate offer

Time to find a card: 1-2 hours

Time to get your card: 2-3 weeks

Total time to payoff: 6-24 months

Fees: $3 – 3% of each balance transferred

It will take you a few hours to compare 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 18 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.

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 transfer your balances is to call the customer service department for the 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

The transfers themselves take time to complete. According to the credit experts at Experian, transfers may be completed in a week for some cards but could take up to a few weeks.^[1] You will need to plan accordingly once you finish consolidating your debt, since this may reduce the amount of time available to pay off the balance interest-free.

Your focus should on the fastest repayment possible. Review your budget to cut any unnecessary expenses. If there are expenses you can cut back or any luxuries you can do without, scale back as much as possible.

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 the standard balance transfer APR to any balance remaining.

Should I transfer my credit card balance?

This is a common question that people ask. Even knowing how balance transfers work, you may be wondering if it’s the right solution for you. You want to know that it will work and that you’ll be able to become debt-free.

You also want to avoid the risk of making a challenging situation with debt worse, which can happen if you run up new balances on your other cards or start making regular purchases on the balance transfer card. All of this can mean you wind up with more debt instead of less.

Here is just one example of a balance transfer question that Debt.com has received:

Question: I have around $5,000 on, I think, five or six credit cards. I’ve been seeing these offers for other credit cards that say I can transfer my balance to them — and they won’t charge me interest. I don’t see how this isn’t a scam. How can they make money if I move thousands of dollars to them and then pay it all off without a dime in interest?

Are these things legit? If they are, what’s the catch? There’s got to be a catch.

— Richard in Delaware

Debt.com Chairman and CPA Howard Dvorkin responds…

Yes, Richard, these offers are “legit” — and yes, there’s a catch. There are several, actually.

First, I think you’re missing a key element of these offers: They expire. When you sign up for what’s known as a zero-percent APR balance transfer, you usually have between six and 18 months before an interest rate kicks in.

Second, that interest rate can be higher than the one you had on your old cards. If the rate is not significantly lower than the rate on your original accounts, then when that 0% APR period expires, you’ll go right back to paying those high-interest charges.

Third, as Debt.com has written about before: “Unfortunately, nearly all zero-percent APR balance transfer offers require the payment of a 3 percent ‘balance transfer fee’ — so this benefit isn’t really free.” You need to be aware that to pay off your balances interest-free doesn’t mean that you’re paying them off free of any charge. Fees on these transfers will increase the amount you need to pay off before you ever get started.

Still, these offers can be a real boon to dedicated debt hawks who want to pay off their credit cards. Why? Because instead of paying around 16 percent each month in interest — which is the national average right now — that 16 percent can go to paying down those big balances.

Sadly, it seldom works out that way.

Credit card companies don’t make these offers out of the goodness filling their bleeding hearts. Many are publicly traded companies with a responsibility (and a moral obligation) to make money for their shareholders.

These companies know most cardholders aren’t going to use those 18 months to pay down debt. They will simply spend whatever they save in interest payments, and when the zero-percent interest offer ends, many will simply be too apathetic to search for a better offer.

The bottom line…

The truth is Drew, that if you have good credit, find the right card, and are disciplined about repayment, these offers can really help you. But the truth is that credit card companies wouldn’t make these offers if they were losing money on them.

These companies are masters of psychology. They know darn well that many people will see the money they’re saving during the no-interest period and simply spend it elsewhere. Then, when the zero-percent offer expires, they still have big debts to pay at the full rate.

So, please keep in mind that DIY isn’t for everyone. Try it once if you think you can be disciplined enough to be one of the few who pays off the balance as planned. If it doesn’t work, don’t keep re-consolidating! Call in the professionals.

Prioritizing 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 faced when she applied for a balance transfer credit card:

Question: 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?

— Susan in Tennessee

Credit expert Laura Adams responds…

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 different 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:

• 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.

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 complaint with the Consumer Financial Protection Bureau at consumerfinance.gov.

How the Credit CARD Act affects balance transfer cards

The Credit Card Accountability, Responsibility, and Disclosure (CARD) Act was passed in 2009 to provide additional consumer protections to credit users.^[2] Part of the act requires credit card companies to apply payments to a balance in order of highest to lowest APR.

For example, if you use your card to take out a cash advance, this balance will be paid off first as you make payments because cash advance APR is generally much higher than the APR applied to regular purchases.

For balance transfers, this can be both good and bad for card users.

Good: Transferred balances pay off highest APR portion of the balance first

As Laura Adams explains in the question above, a transfer is basically treated like a payment. So, if you only transfer a portion of the balance from one of your accounts, the portion with the highest APR would be transferred first. If you have cards with cash advances on them that are costing an arm and a leg, transferring part of the balances would wipe out those higher interest charges.

Bad: Making regular purchases on a balance transfer card can negate 0% APR

On many balance transfer credit cards, the 0% APR period only applies to balance transfers. Regular purchases made on the card would have purchase APR applied to the balance. Since this rate is higher than the 0% teaser rate applied to the balances you moved, purchases would be paid off first. If you make regular purchases on a balance transfer card, you may miss out on the benefit of the 0% APR period.

More questions about transfers