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What Is a Balance Transfer Credit Card?

What Is a Balance Transfer Credit Card?

A balance transfer credit card allows you to move high-interest debt from other credit cards to a new card with a lower interest rate – usually 0% for an introductory period. This can save you money on interest charges and help you pay off debt faster.

How Balance Transfer Cards Work

Balance transfer cards work by giving you a 0% APR promotional period – typically 12-21 months – on balances transferred from other credit cards. Some cards also offer a 0% intro APR on purchases for a set time.To transfer a balance, you’ll need to apply for a new balance transfer card and provide details on the debts you want to move over. The card issuer will pay off those balances, and you’ll owe them the total amount instead – but at a lower interest rate during the intro period.After the 0% APR period ends, any remaining balance will be charged interest at the standard purchase APR rate. It’s important to have a plan to pay off or transfer any remaining balance before that happens.

Benefits of Balance Transfers

The biggest benefit is saving money on interest charges while paying down debt faster. With no interest accruing for 12-21 months, all your payments go directly towards the principal balance.For example, if you transfer $5,000 from a card with 18% APR to one with 0% APR for 15 months, you could save over $700 in interest by paying it off during the intro period.Balance transfers can also simplify debt repayment by consolidating multiple balances onto one card. This makes tracking payments and due dates easier.Some balance transfer cards also offer rewards like cash back or travel points on transferred balances and new purchases.

Drawbacks to Consider

While balance transfers offer benefits, there are some potential downsides:

• Balance transfer fees: Most cards charge a 3-5% fee to transfer a balance, which gets added to the total you owe. This fee can offset some interest savings.
• Deferred interest: Some cards use “deferred interest” where if you don’t pay off the entire transfer amount during the intro period, you’re charged interest retroactively from the transfer date. Always read the terms carefully.
• Only for existing debt: The 0% APR is only for balances transferred, not new purchases. New purchases accrue interest at the standard rate.
• Credit score impact: Opening a new credit card can cause a small, temporary drop in your credit score due to the hard inquiry and new account. But paying off debt responsibly can improve your score long-term.
• Upfront costs: Some balance transfer cards have annual fees, which add to the overall cost.

How to Get the Most From a Balance Transfer

To maximize the benefits of a balance transfer card:

• Have a plan to pay off the full transferred balance before the 0% period ends to avoid interest charges.
• Don’t use the card for new purchases if possible, as those accrue interest right away.
• Consider cards with longer 0% intro periods and no annual fees to minimize costs.
• Make sure you get a high enough credit limit to transfer your total debt balance.
• Avoid transferring balances between cards from the same issuer, as they often don’t allow this.
• Check your credit scores first, as you’ll need good to excellent credit to qualify for most balance transfer offers.

Top Balance Transfer Card Offers

Here are some of the top balance transfer credit cards on the market right now:

Citi Simplicity® Card

• 0% intro APR for 21 months on balance transfers
• 0% intro APR for 12 months on purchases
• No late fees, no penalty APR
• No annual fee
• 5% balance transfer fee (minimum $5)

Wells Fargo Active Cash® Card

• 0% intro APR for 15 months on qualifying balance transfers
• Unlimited 2% cash back on all purchases
• No annual fee
• 3% intro balance transfer fee for 120 days, then up to 5%

U.S. Bank Visa® Platinum Card

• 0% intro APR for 20 billing cycles on balance transfers
• No annual fee
• 3% balance transfer fee

Chase Slate Edge℠

• 0% intro APR for 18 months on purchases and balance transfers
• No annual fee
• Balance transfer fee of 3% when you transfer during first 60 days ($5 minimum)

BankAmericard® Credit Card

• 0% intro APR for 18 billing cycles on balance transfers made in first 60 days
• No annual fee
• 3% balance transfer fee (minimum $10)

Be sure to compare balance transfer fees, intro APR periods, regular APRs after the intro period ends, credit limits, and other features to find the right card for your needs.

Balance Transfer Card FAQs

How long does a balance transfer take?

It usually takes 10-14 days for a balance transfer to be processed and post to your new credit card account after you’re approved. The amount you transfer will show as the new balance.

Can I transfer balances between two cards from the same issuer?

Most card issuers don’t allow you to transfer balances between two of their own credit card products. The balance transfer has to be from a different issuer’s card.

Do balance transfers hurt your credit score?

A balance transfer itself doesn’t impact your credit scores. But applying for a new credit card results in a hard inquiry, which can cause a small, temporary score drop. Your scores may also go down slightly due to the new account being added.

What if I can’t pay off my balance transfer before the 0% APR period ends?

If you still have a remaining balance when the intro 0% APR expires, you’ll start accruing interest charges at the standard purchase APR, which can be quite high (often 16%+). It’s best to pay it off during the intro period or do another balance transfer.

Can I transfer other types of debt to a balance transfer card?

No, balance transfer cards are only for transferring balances from other credit cards. You can’t move debt from things like loans, lines of credit, mortgages, etc.

Balance Transfer Cards: The Bottom Line

A balance transfer credit card can be an effective tool for paying down high-interest credit card debt faster and more affordably. But it requires discipline to pay off the balance aggressively before the 0% APR period ends.By understanding how balance transfers work, the potential pitfalls to avoid, and comparing your best card options – you can leverage a balance transfer to your advantage and save money while eliminating debt.