What is a balance transfer credit card and how does it work?
A balance transfer involves moving debt from one account to another. And a balance transfer credit card is any card account where that debt is moved.
This guide offers a step-by-step look at the balance transfer process, some possible benefits and what to consider before you get started.
What you’ll learn
- A balance transfer lets you transfer debt to a credit card. It may help you consolidate debt, simplify payments and potentially pay less interest.
- In addition to credit card balances, some lenders might let you transfer debt from personal, student and car loans.
- You’re not typically allowed to transfer balances between two credit cards from the same issuer.
- Card issuers may charge a flat balance transfer fee or a percentage of the transferred amount.
How do balance transfers work?
A balance transfer involves moving debt to a different credit card. It’s often used to move credit card balances. But it also may be possible to use a balance transfer to consolidate student loans, car loans and personal loans onto a card.
In general, balance transfers can’t be more than the credit limit on the new account. And there might also be separate balance transfer limits.
If the balance transfer account offers a promotional rate, such as a 0% annual percentage rate (APR), it could make it easier to pay off debt without building interest. But to do that, it’s important to make payments on time and keep the account in good standing.
Every credit card issuer has its own policies. So it’s best to check out the details if you think a balance transfer is right for you.
How to choose a balance transfer credit card
Balance transfer offers can vary depending on things like the credit card issuer, the card and the applicant. Here are some things to consider when comparing balance transfer cards:
- Promotional APR period: Longer promotional periods might mean more time to repay debt without incurring additional interest charges. Paying off most or all of the debt before the promotional period ends could help save on the total cost of the debt.
- Standard interest rate: Regular interest rates will generally apply to balance transfers and new purchases after the introductory period ends. So a lower APR or interest rate might help if you plan to keep using the card after repaying the debt.
- Potential transfer fees: Credit card issuers may charge a flat balance transfer fee or a percentage of the transferred amount. The savings on interest should ideally outweigh potential fees.
- Transfer terms: Most credit card issuers only allow cardholders to transfer external credit card balances. This means you typically can’t transfer balances between two cards from the same issuer.
How to transfer a credit card balance
Balance transfers aren’t complicated, but there are several steps involved. Here’s how the process could go.
1. Decide how much to transfer
To start, consider making a list of any existing balances, their interest rates and repayment terms. That way, it could give you an idea of the credit and balance transfer limits you’ll need for the card you want to transfer to. It can also make it easier to prioritize which debts to transfer if you can’t do them all.
You may be able to transfer balances and consolidate debt on an existing card. Applying for a new card, especially one with a promotional intro rate, could also be an option.
2. Apply for a balance transfer credit card
Some credit card issuers have online applications for balance transfer credit cards. The process may only take a few minutes. Like other credit card applications, it typically requires basic personal and financial information, including your:
- Full name
- Address
- Income
- Social Security number
3. Initiate the balance transfer
You may be able to request a balance transfer during or after the application process. In most cases, you can start the process online or over the phone. You’ll typically need to provide the details of the account you wish to transfer from and how much of the debt you want to move.
Keep in mind that many banks won’t process the balance transfer request until the account is at least 10 days old.
4. Wait for the balance transfer to go through
Balance transfers could take a few days to several weeks. For example, Capital One cardholders can generally expect a balance transfer to take three to 15 business days, depending on whether the transfer was sent electronically or by check. View important rates and disclosures.
Continue making at least the minimum payment while waiting for the balance to transfer. And if you transferred the full balance, make sure the account has a zero balance after the transfer is complete. Otherwise, the lender may continue to charge interest or fees.
5. Start paying off the balance
A repayment strategy could help you pay off credit card debt before the promotional period ends, which can save on interest.
What to consider before initiating a balance transfer
A balance transfer can be a useful tool for lowering the interest rate on your debt and making it simpler to pay off. But it might not be right for everyone. Before applying for a balance transfer credit card, it may be helpful to consider these questions:
- Will it make repaying my debt easier? A balance transfer might make more sense for people with high-interest debt or those who want more time to repay. It can also be helpful for people who want to consolidate multiple debts into a single monthly payment.
- Will I qualify for a balance transfer? People with good or excellent credit scores are more likely to qualify for a longer promotional period. And that can make it easier to repay the debt without accruing additional interest. Applicants with lower credit scores may still qualify for an introductory APR, but the promotional interest window may not be as long.
Balance transfer FAQ
Still curious about balance transfers? Consider the following frequently asked questions.
Do balance transfers hurt your credit score?
Applying for a new credit account, like a balance transfer card, can trigger a hard inquiry. And hard inquiries can cause a slight, temporary drop in your credit scores.
Can a balance transfer be denied?
A credit card issuer could deny a balance transfer if:
- The proposed transfer amount exceeds the transfer limit or the credit limit on the card.
- The transfer attempt is initiated outside the transfer window outlined in the card’s terms.
- Your account isn’t in good standing.
- The proposed transfer is to a new account from the same credit card issuer. Some issuers don’t allow debt transfers from different internal accounts.
Can you get a balance transfer card if you have bad credit?
People who have below-average credit scores could find it harder to qualify for a balance transfer credit card with a low intro APR.
Those who don’t qualify for a card with 0% interest may still qualify for a card with a lower interest rate than that of other cards. And that could still help them save money on interest. Or they could consider other options like improving their credit scores first.
Can you use your credit card after a balance transfer?
Transferring a balance won’t automatically close an old credit card account, so you can technically still use the card. Keeping the account open without adding more debt can also help keep your credit utilization ratio low and average account age higher, which may help your credit scores.
But if the temptation to overuse available credit is too great, it may be worth closing the account and focusing on paying off existing balances.
Key takeaways: balance transfer credit cards
A balance transfer could help you streamline your finances, consolidate debt to a credit card and save money on interest. By knowing how the process works, you can maximize your benefits.
Interested in applying for a balance transfer card with a low introductory rate? Explore Capital One’s balance transfer credit cards.
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