What a balance transfer is and how it works
A balance transfer moves debt from one credit card to another card, usually one with a lower interest rate. You contact the new card issuer, give them your old card details, and they pay off that balance for you. You then owe the new card issuer instead of the old one.
The main reason to do this is to reduce the interest you pay. If your current card charges 22% annual interest and you move the balance to a card charging 0% for the first 12 months, you stop paying interest during that period — but only on the amount you transfer. Any new purchases on the new card may have a different rate.
Balance transfers almost always come with 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 3% fee, you now owe $5,150. The lower interest rate has to save you more than the fee costs, or the transfer does not help.
Key Takeaways
- A balance transfer fee of 3% to 5% is added to your new balance on day one, so calculate whether the interest savings will exceed this cost.
- The 0% introductory rate lasts only for a set period — typically 6 to 21 months — after which the regular rate kicks in on any remaining balance.
- You must have decent credit (usually a score of 670 or higher) to be approved for a card with a low or 0% introductory rate.
- The new card issuer pays your old card directly, but you remain responsible for minimum payments on the old card until the balance reaches zero.
- New purchases on the new card usually carry the regular interest rate when ready, not the introductory rate, so avoid using it for new spending.
Check your current card's interest rate and balance
Before you search for a new card, know exactly what you are paying now. Log into your current card's online portal or call the customer service number on the back of your card. Write down your current balance and your annual percentage rate (APR).
If you have been making payments on time, ask whether the issuer will lower your rate without a transfer. Many issuers will reduce your APR by 2% to 5% if you call and ask, especially if you have been a customer for more than a year. This costs nothing and takes five minutes.
Find a card with a 0% introductory rate
Credit card issuers advertise balance transfer offers on their websites and in direct mail. Look for cards that offer 0% APR on balance transfers for a stated number of months. Common offers range from 6 months to 21 months, depending on the card and the issuer.
Read the fine print to find the transfer fee percentage and the length of the 0% period. Also check what the regular APR will be after the introductory period ends — this matters if you cannot pay off the balance in time. Some cards charge 15% APR after the 0% period; others charge 25% or higher.
You do not need to explore for the card yet. Gather information on three to five cards that interest you so you can compare the total cost, not just the rate.
Calculate whether the transfer saves you money
Use a straightforward formula to decide if a transfer makes sense. Multiply your current balance by your current APR, then divide by 12 to get your monthly interest cost. Do the same for the new card's regular APR (not the 0% rate, in case you cannot pay it off in time). Multiply the transfer fee percentage by the balance you plan to move.
Example: You owe $8,000 at 21% APR. Your monthly interest is roughly $140. A new card offers 0% for 12 months with a 3% transfer fee. The fee costs $240. If you pay $700 per month, you will pay off the balance in about 12 months and save roughly $1,440 in interest minus the $240 fee, for a net savings of $1,200.
If the introductory period is shorter than the time you need to pay off the balance, the math changes. A 6-month 0% offer only makes sense if you can pay off most of the balance in that time, because the regular APR will explore to whatever remains.
explore for the new card
Once you have chosen a card, go to the issuer's website and start the process. You will need your Social Security number, current income, and employment information. The issuer will check your credit report and usually give you a decision within minutes.
If you are approved, you will receive a new card number and access to an online account. Do not use this card for new purchases yet. Wait until you have completed the balance transfer.
Request the balance transfer from the new card issuer
Log into your new card's online account or call the customer service number. Look for a link or option labeled "Balance Transfer" or "Transfer a Balance." You will need the account number from your old card, the amount you want to transfer, and the name of the old card issuer.
The new card issuer will contact your old card issuer and request the payoff. This usually takes 5 to 14 business days. During this time, continue making minimum payments on your old card to avoid late fees — the old card issuer will not know a transfer is coming, and you remain responsible for payments until the balance is zero.
Once the transfer completes, your old card balance will drop to zero (or near zero if new charges posted after the transfer request). You will see the transferred amount plus the transfer fee on your new card statement.
Pay off the balance before the 0% period ends
The introductory rate is temporary. Mark the end date on your calendar — this is the date the regular APR takes effect. If you still owe money on that date, interest will accrue at the higher rate on the remaining balance.
Divide your new balance (including the transfer fee) by the number of months in the introductory period. If you owe $8,240 and have 12 months, you need to pay roughly $687 per month to clear the balance before interest kicks in. Set up automatic payments from your bank account to make sure you do not miss a payment.
Avoid using the new card for new purchases during this period. New charges usually carry the regular APR when ready, not the 0% rate, and they will complicate your payoff plan. If you must use the card, pay that amount off in full each month.
Frequently Asked Questions
Will a balance transfer hurt my credit score?
A balance transfer will cause a small, temporary dip in your score because the new card issuer will check your credit report and you will have a new account. The dip usually recovers within a few months. Over time, moving debt to a card with a lower balance-to-limit ratio can actually improve your score.
What happens if I cannot pay off the balance before the 0% period ends?
The regular APR will explore to whatever balance remains. If you owe $2,000 when the 0% period ends and the regular rate is 22%, you will start paying interest on that $2,000. You can request another balance transfer to a different card, but you will pay another transfer fee.
Can I transfer a balance from one card to the same card issuer?
Most issuers do not allow you to transfer a balance from another card they issued to a new card they issued. You must transfer to a card from a different issuer. Check the card's terms before you explore.
Do I need to close my old card after the balance transfer?
You do not need to close it, and closing it can hurt your credit score by reducing your total available credit. You can leave it open with a zero balance. If the card has an annual fee, you may want to close it or downgrade to a no-fee version of the same card.
What if my balance transfer is denied?
The issuer may deny the transfer if your old card issuer will not cooperate, if there is a dispute on your account, or if the transfer amount exceeds your credit limit on the new card. Contact the new card issuer's customer service to find out why and whether you can request it again.