What a balance transfer does and when it makes sense
A balance transfer moves debt you owe on one credit card to a different card, usually one with a lower interest rate. You pay off the old card's balance using the new card's credit line, then pay down that new balance over time.
Balance transfers are most useful when you carry a balance on a card charging 18% or higher and you find a card offering 0% interest for a set period — typically 6 to 21 months. During that period, your payment goes entirely toward the principal instead of interest. If you can pay off the transferred balance before the promotional rate ends, you save hundreds or thousands in interest charges.
Balance transfers make less sense if you cannot pay down the balance during the 0% window, because once the promotional period ends, the interest rate jumps to the card's regular rate, which is often as high as or higher than what you started with. They also do not help if you continue using the old card and accumulate new debt.
Key Takeaways
- Balance transfer cards charge a one-time fee (usually 3% to 5% of the amount transferred) but offer 0% interest for 6 to 21 months, saving money only if you pay off the balance before the rate increases.
- You initiate the transfer by contacting the new card issuer after your account is open, providing the old card's account number and the amount you want to move.
- The transfer typically takes 5 to 14 business days to complete, and you should keep making payments on the old card until the balance shows as zero.
- Stop using the old card once the balance is transferred, and create a payoff plan that eliminates the new balance before the promotional rate expires.
- If you cannot pay off the transferred balance during the 0% period, the regular interest rate kicks in and you may end up paying more than you would have on the original card.
How to choose a balance transfer card
Start by comparing cards based on three factors: the length of the 0% promotional period, the balance transfer fee, and the regular interest rate that applies after the promotion ends.
A longer 0% window gives you more time to pay down the balance without interest. Cards typically offer 0% for 6, 12, 15, 18, or 21 months. The longer the period, the lower your monthly payment needs to be to clear the debt before interest kicks in. However, cards with longer promotional periods often charge higher balance transfer fees or have stricter credit requirements.
The balance transfer fee is a percentage of the amount you move — usually 3%, 4%, or 5%. A $5,000 transfer at 4% costs $200 upfront. Factor this fee into your savings calculation: if you would pay $800 in interest on the old card over 12 months, but the new card charges a $200 fee and 0% for 12 months, you still save $600. If the fee is $300 and you can only pay off half the balance in 12 months, the math may not work in your favor.
Check the regular interest rate (called the purchase APR) that applies after the promotional period. If you cannot pay off the entire balance during the 0% window, you want a card with a competitive regular rate, not one that jumps to 24% or higher.
Steps to initiate a balance transfer
Once you have chosen a card and been approved, contact the new card issuer to start the transfer. Most issuers let you request a transfer through their website, mobile app, or by phone.
You will need to provide the account number of the card you are transferring from, the amount you want to transfer, and sometimes the name and address of the old card's issuer. The new card issuer will then contact your old card company to pull the funds. Do not close the old card account during this process — the transfer needs the account to remain open to complete.
The transfer typically takes 5 to 14 business days. During this time, keep making your regular minimum payment on the old card. Once the balance shows as zero on the old card's statement, the transfer is complete and the balance now appears on the new card.
Some issuers allow you to request the transfer before your new card arrives in the mail, so you can start the process as soon as your process is approved. Check your new card issuer's website or call the number on your approval letter to confirm how to proceed.
What happens to your old card after the transfer
After the balance transfers, your old card's balance will be zero, but the account remains open. You now have two active credit cards. Closing the old card when ready after a transfer can hurt your credit score because it reduces your total available credit and shortens your average account age. Most financial advisors recommend keeping the old card open but unused.
Store the old card somewhere safe and do not use it for new purchases. If you start charging on the old card again, you will accumulate new debt at the old card's regular interest rate while you are also paying off the transferred balance on the new card. This defeats the purpose of the transfer and makes your debt harder to manage.
If the old card charges an annual fee, you may want to contact the issuer and ask them to waive it or downgrade you to a no-fee version of the card. If they refuse and the fee is high, closing the card after 6 to 12 months (once the transfer is fully paid off) is a reasonable option.
Creating a payoff plan for the transferred balance
The key to saving money on a balance transfer is paying off the entire balance before the 0% promotional period ends. Calculate how much you need to pay each month to reach zero by the expiration date.
If you transfer $5,000 and have 12 months of 0% interest, you need to pay at least $417 per month to clear the balance. If you can only afford $300 per month, you will still owe $1,400 when the promotional rate expires, and that remaining balance will then accrue interest at the regular rate.
Set up automatic payments from your bank account to the new card for at least your calculated monthly amount. Automatic payments reduce the risk of missing a due date, which would end your promotional rate when ready and trigger a penalty interest rate (often 29.99% or higher). Even one late payment can disqualify you from the 0% offer.
Mark the date when the 0% period ends on your calendar. About two months before that date, check your balance and adjust your payment plan if needed. If you are on track to pay it off, continue as planned. If you are behind, consider whether you can increase your monthly payment or whether you need to explore other options.
Risks and common mistakes to avoid
The most common mistake is continuing to use the old card or accumulating new debt on the new card while paying off the transferred balance. New purchases on the new card typically accrue interest when ready at the purchase APR, even during the 0% promotional period. Only the transferred balance gets the 0% rate.
Another risk is missing a payment important date. Credit card issuers can cancel your 0% promotional rate if you pay late, even by one day. Once the rate is cancelled, the remaining balance is subject to the regular interest rate, which can be 20% or higher. Set up automatic payments and check your statement each month to confirm the payment posted on time.
Do not assume the balance transfer fee is worth it without doing the math. If you are only transferring $1,000 and the fee is 5%, you pay $50 upfront. If the old card's interest rate is 15% and you plan to pay off the balance in 4 months, you would pay only about $50 in interest anyway. The transfer fee does not save you money in this scenario.
Finally, do not explore for multiple balance transfer cards in a short time period. Each process triggers a hard inquiry on your credit report, which can lower your score. Multiple inquiries in a short window may also signal to lenders that you are taking on too much debt, making it harder to get approved for future credit.
What to do if the balance transfer is denied or delayed
If your transfer request is denied, contact the new card issuer to ask why. Common reasons include an error in the account number you provided, the old card issuer not recognizing the request, or a hold on your account while the issuer reviews it.
If there is an error, you can resubmit the transfer request with corrected information. If the old card issuer is not responding, you may need to call them directly to confirm the account is in good standing and can receive a transfer.
If the transfer is delayed beyond 14 business days, contact the new card issuer's customer service line. Transfers occasionally get stuck in processing, and the issuer can investigate and resubmit if needed. Keep records of when you requested the transfer and any confirmation numbers you received.
If you cannot complete a balance transfer for any reason, you still have other options: you can request a lower interest rate from your current card issuer, explore a personal loan at a fixed rate, or work with a nonprofit credit counselor to develop a debt repayment plan.
Frequently Asked Questions
Does a balance transfer hurt my credit score?
A balance transfer itself does not hurt your score, but the hard inquiry from the new card process may lower it by a few points temporarily. Your score may also dip slightly when the new account opens because it lowers your average account age. However, if the transfer reduces your credit utilization ratio (the amount of credit you are using compared to your total available credit), your score may recover and improve within a few months.
Can I transfer a balance from one card to the same card issuer's other card?
Most card issuers do not allow you to transfer a balance between their own cards. You typically need to transfer to a card from a different issuer. Check your new card's terms or call the issuer to confirm whether they accept transfers from their own other products.
What happens if I do not pay off the balance before the 0% period ends?
The remaining balance will be subject to the card's regular interest rate, which is usually 18% to 24% or higher. You will owe interest on whatever balance remains, calculated daily. If you owe $2,000 when the 0% period expires and the regular rate is 20%, you will pay roughly $33 per month in interest alone until the balance is paid off.
Can I do another balance transfer if I do not pay off the first one in time?
Yes, you can transfer the remaining balance to another 0% card, but this strategy has limits. Each transfer incurs a new fee (3% to 5%), and explore for multiple cards in a short time can damage your credit score. This approach works only if you have a concrete plan to pay off the balance during the second promotional period.
Should I close my old card after the balance is transferred?
It is usually better to keep the old card open but unused. Closing it reduces your available credit and can lower your credit score. If the card charges an annual fee, contact the issuer and ask them to waive it or convert it to a no-fee card. If they refuse, you can close it after 6 to 12 months once the transfer is paid off and your credit has stabilized.