What happens when you transfer credit card debt
A balance transfer moves the money you owe on one credit card to another card, usually one with a lower interest rate. The new card's issuer pays off your old balance, and you then owe that amount to them instead. The goal is to pay less interest while you work down what you owe.
Most balance transfer cards offer a promotional period — typically 6 to 21 months — during which the interest rate is 0% or very low. After that period ends, the regular interest rate kicks in. You need to understand both the promotional rate and what comes after, because the math changes completely once the offer expires.
Balance transfers are not free. You will pay a transfer fee, usually 3% to 5% of the amount you move. This fee is added to your new balance, so if you transfer $5,000 with a 4% fee, you now owe $5,200 on the new card. Factor this into your decision — a lower rate only helps if you can pay down the debt faster than the fee cost you.
Key Takeaways
- Balance transfer cards charge a fee (usually 3% to 5%) upfront, which gets added to your new balance.
- The 0% promotional period typically lasts 6 to 21 months, after which the regular interest rate applies to any remaining balance.
- You must make at least the minimum payment on time during the promotional period, or you may lose the 0% offer.
- The card issuer will check your credit and may deny the transfer if your credit score is too low or your debt is too high relative to your income.
- Any new purchases on the balance transfer card usually accrue interest when ready at the regular rate, even during the promotional period.
Check your credit score and debt-to-income ratio before you start
Balance transfer cards are designed for people with decent credit. Most issuers want a credit score of 670 or higher, though some accept scores in the 600s. If your score is below 600, you may not be approved, or you may get a higher interest rate after the promotional period ends.
Issuers also look at your debt-to-income ratio — how much you owe compared to what you earn. If you carry a lot of debt already, they may deny your transfer or approve you for only a portion of what you requested. You can pull your own credit report for free at annualcreditreport.com to see what lenders will see. This also lets you spot errors before you explore.
If your credit score is lower than you expected, explore for a balance transfer will trigger a hard inquiry, which temporarily lowers your score a few more points. If you are not approved, you have wasted that inquiry. Consider improving your score first — paying down existing balances and fixing any errors on your report — before you explore.
Calculate whether the transfer actually saves you money
The math is straightforward but straightforward to get wrong. You need three numbers: your current balance, the transfer fee, and how much you can pay each month during the promotional period.
Let's say you owe $3,000 at 18% interest. A balance transfer card offers 0% for 12 months with a 4% fee. The fee is $120, so your new balance is $3,120. If you pay $260 per month for 12 months, you pay off the entire balance during the promotional period and save the interest you would have paid. But if you can only pay $200 per month, you will still owe $720 when the 12 months end — and then that $720 will start accruing interest at the new card's regular rate, which might be 20% or higher.
Before you explore, use a balance transfer calculator (available free on most card issuers' websites) or do the math yourself: divide your balance by the number of months in the promotional period. That is the monthly payment you need to make to reach zero by the time the offer expires. If you cannot commit to that amount, a balance transfer may not help you.
Find and explore for a balance transfer card
Balance transfer offers are advertised on credit card company websites and on comparison sites like NerdWallet, The Points Guy, and Bankrate. Look for cards that match your situation: if you have fair credit, search for "balance transfer cards fair credit." If you have excellent credit, you will see longer promotional periods and lower fees.
Read the fine print before you explore. The promotional period, the fee, and the regular interest rate after the offer ends are all in the terms. Some cards also charge an annual fee, which eats into your savings. A few cards waive the annual fee for the first year or for cardholders who transfer a balance.
When you are ready, click the issuer's process link. You will enter your name, address, income, and employment information. The issuer will pull your credit report and tell you within minutes whether you are approved and, if so, what credit limit you received. Your credit limit is the maximum you can transfer, so if you are approved for $5,000 but owe $8,000, you can only move $5,000.
Complete the balance transfer and manage the new card
Once you are approved, the issuer will ask you for the details of the card you want to pay off: the account number, the card issuer's name, and the amount you want to transfer. You can usually do this online, by phone, or by mail. The new card issuer will then contact your old card issuer and arrange the payment.
The transfer typically takes 5 to 14 business days. During this time, keep making minimum payments on your old card so you do not fall behind. Once the transfer posts to your new card, you can stop paying the old card — but do not close the old account. Closing it will hurt your credit score by reducing your available credit and shortening your credit history.
On your new card, set up automatic payments for at least the monthly amount you calculated earlier. Missing a payment during the promotional period can trigger a penalty interest rate, which means you lose the 0% offer when ready. Some issuers will reinstate the rate if you call and ask, but do not count on it — automatic payments are your safest bet.
Do not use the new card for new purchases. Any new charges will accrue interest at the regular rate right away, even during the promotional period. If you need to use a credit card, use a different one or wait until you have paid off the balance.
Plan for what happens when the promotional period ends
Mark your calendar for the last month of the promotional period. If you have paid off the entire balance by then, you are done — close the card or leave it open with a zero balance (closing it can hurt your credit score slightly, so many people leave it alone).
If you still owe money when the promotional period ends, the remaining balance will start accruing interest at the card's regular rate. This rate is usually 18% to 25%, depending on your creditworthiness. At that point, you have a few options: keep paying down the balance on this card, transfer the remaining balance to another 0% card (if you may have access to), or pay it off with cash or a personal loan if you have those options.
Some people chain balance transfers — moving the remaining balance to a new 0% card every time an offer expires. This works only if your credit score stays strong and you keep paying down the principal. If you just move the balance without paying it down, you will end up owing more because of the fees, and eventually no issuer will approve you.
Understand what can go wrong and how to avoid it
The most common mistake is missing a payment. Even one late payment can end the promotional rate and trigger a penalty rate of 25% or higher. Set up automatic payments and check your statement each month to confirm the payment went through.
The second mistake is making new purchases on the balance transfer card. These accrue interest when ready and at the regular rate, which defeats the purpose of the transfer. Use a different card or pay cash for new purchases.
The third mistake is not paying down the balance during the promotional period. If you only make minimum payments, you will still owe most of the balance when the 0% offer ends. The promotional period is your window to pay down principal without interest — use it.
Finally, do not explore for multiple balance transfer cards in a short time. Each process triggers a hard inquiry, which lowers your score. Multiple inquiries in a few months can signal to lenders that you are desperate for credit, which makes them less likely to approve you or offer you good terms.
Frequently Asked Questions
Can I transfer a balance from one card to another card from the same bank?
Most issuers do not allow you to transfer a balance between their own cards. You will need to transfer to a card from a different bank. Check the issuer's terms before you explore to confirm.
What if I cannot pay off the balance before the promotional period ends?
You can transfer the remaining balance to another 0% card if you may have access to, or you can pay it down as fast as you can on the current card. The longer you carry a balance after the promotional period ends, the more interest you will pay. Consider a personal loan or asking family for help if you are stuck.
Does a balance transfer hurt my credit score?
Yes, but usually only temporarily. The hard inquiry lowers your score by a few points, and opening a new card lowers it slightly more. However, the transfer also lowers your credit utilization (the percentage of your available credit you are using), which helps your score. Most people see their score recover within a few months if they make on-time payments.
Can I transfer a balance if I am behind on payments?
Most issuers will not approve you if you are currently late on any account. You will need to bring your accounts current first. Once you have made on-time payments for a few months, your approval odds improve.
What happens to my old card after I transfer the balance?
The old card will show a zero balance, but the account remains open. You can leave it open (which helps your credit score) or close it later. Do not close it when ready after the transfer, as this can hurt your score.