How To Do A Balance Transfer In 8 Steps

A balance transfer moves a balance from one card or account to another. Ideally, the debt moves to an account with a lower interest rate or an introductory 0% APR. In many cases, a balance transfer can save you money, but there is a catch: The rate is an introductory rate, meaning that it will end after a certain period of time. Also, there will typically be a balance transfer fee ranging from 3% to 5% of the amount of your transfer.

Balance transfer cards are typically only available to those with good or better credit. And even if you are approved, it’s important to have a plan to pay off the debt before the end of the introductory period. If you’re still carrying debt on your balance transfer card at the end of the low or 0% interest promotional period, the card’s regular variable interest rate will apply and it may be higher than the card you transferred debt from—and you could wind up accruing debt all over again.

1. Review Your Existing Debt

Take some time to review your credit cards that have a balance. Take note of how much you owe and what the interest rate is for each card. Your interest rate and your APR are the same thing when it comes to credit cards—though for other financial products, they can differ.

You can find your credit card’s APR on your monthly statement or you can call the number on the back of your card and ask customer service for the information. Your goal is to move your debt to a card with a lower interest rate than what you’re already paying on your existing debt.

2. Decide Where To Transfer Debt

Do your due diligence to find potential cards to shift your balance to. Are you hoping to take advantage of a limited-time 0% APR balance transfer offer? Or do you want a longer runway than what typically comes with a promotional offer? If so, you might be better off moving your debt to a card that has a low ongoing APR.

You may already even have a card with a regular APR that’s significantly lower than the account you’re looking to transfer debt from—or one with a temporary 0% APR offer available. Depending on your credit history, that could be an appealing option as it means you won’t have to apply for a new card, which can temporarily ding your credit score.

3. Review the Offers on Other Cards

Know the Difference in Offer Types

If you’re primarily interested in a 0% APR balance transfer offer, compare what’s available to find a card that will help you save the most money overall. Cards with 0% APR offers don’t all work the same way. Some let you bypass interest payments on purchases and balance transfers, but others only extend the offers to one or the other. A card that has an interest-free period just on purchases won’t help you much with a goal of paying down existing debt.

Consider the Offer Length

Pay attention to the length of time for any introductory balance transfer offers. The promo period can vary greatly between different cards, ranging anywhere from six months to nearly two years. Make sure any card you’re considering offers enough time for you to make a serious dent in your debt, if not wipe it out completely.

Remember: No Transfers Within the Same Issuer

You should also know that most issuers do not allow you to transfer a balance from one of their cards to another one of their cards. In other words, Chase card to Chase card balance transfers, Citi to Citi cards transfers, etc., are not allowed. You can sometimes get around this by using a balance transfer check where you write a check to yourself, deposit it into a bank account, and can use that money to pay anything you want, even a balance on a credit card from the same bank.

4. Compare Your Top Picks

Even if you find cards that offer the same promotional length of time on a balance transfer, pay attention to the terms surrounding a transfer.

Calculate Balance Transfer Fee

Most balance transfer cards charge a balance transfer fee, usually 3% to 5% of the amount being transferred. Make sure you include this fee in your card comparisons to see if you’ll actually be saving money by doing a balance transfer.

When deciding between seemingly similar options, it helps to calculate the amount you’re looking to transfer plus any balance transfer fees, along with how many months you’ll need to pay off the debt. This can help you narrow down the balance transfer card that makes the most sense for your particular circumstances.

Read the Fine Print

Sometimes that 0% APR offer comes with a catch. If you miss a payment or pay late for example, it could nullify the offer. This means you’ll have to pay whatever the standard variable interest rate is for that card, which could end up costing you more overall. Make sure you know the exact details when it comes to any card that’s a contender for your balance transfer.

Be Aware of Transfer Deadlines

You should also note the amount of time you’ll have to do the transfer as every card has a different window of time before the ability to transfer at the promotional APR expires. Some require a transfer to be requested within 30 days, others 45 or even 60 days. You might find one choice more appealing than another, especially if you hope to consolidate balances from multiple cards onto one new card.

5. Apply for the New Card

The process of applying for a balance transfer credit card is the same as applying for any other credit card. You’ll have to supply some basic information about yourself including your Social Security number, birthdate, income and housing or other monthly expenses.

It’s a good idea to know your credit score before applying for a new balance transfer card because credit cards have recommended credit scores for approval. Your expectations should be in line with your qualifications. The best balance transfer offers tend to be reserved for those with good-to-excellent credit, although it may be possible to find low or no-interest offers with fair credit.

You can access your credit score through a number of credit card issuers for free. You can also order your score from one of the three main credit agencies: TransUnion, Equifax and Experian. The easiest way to check your credit report is by using annualcreditreport.com, but this will not give you access to your credit score.

You may also want to check and see if you’re pre-qualified for any balance transfer cards. Several issuers, like American Express, Bank of America, Capital One and Discover will let you check to see if you’re pre-qualified for any of their cards. Keep in mind that pre-qualification doesn’t ensure approval. But it does mean that the lender, based on some of your basic credentials, thinks you have a good shot.

6. Gather Information

Here’s the tricky thing when it comes to getting a balance transfer card: Although you may get approved for the card that you want, you won’t find out your credit limit until you receive approval. This means, for example, that even if you had planned on transferring $10,000 in debt to a new card, it’s possible you may not get as high a credit limit as you need to do that.

Unfortunately, there’s no way to know for sure just how much of a credit limit you’ll be approved for. If you end up getting a lower limit than what you’d hoped, you can try calling the issuer and asking if they’d consider increasing your initial limit. That said, know that even if you get your desired credit limit, it’s possible for issuers to cap the amount of debt that can be transferred.

After you’re approved and you know what the credit limit is on the new card, now is the time to collect the information you’ll need to transfer your debt. This will include the account numbers of any accounts you’re looking to transfer from as well as the amount you plan on transferring.

Don’t forget to calculate the amount of any balance transfer fee into the amount you’ll be putting on the new card. For example, if you’re looking to move $10,000 worth of debt to your new card and there’s a 3% balance transfer fee, your new card will have a balance of $10,300. Some banks will add the amount of the balance transfer fee to the amount you can transfer, meaning someone with a $10,000 limit and a 3% balance transfer fee will only be able to transfer $9,708.

7. Make a Payment Plan

If you’re taking advantage of a 0% APR offer, then ideally you’ll create a payment schedule based on the number of months you have to pay off your debt without accruing interest. But even if paying off your debt completely within the promotional period isn’t realistically attainable, you should still aim to make as much headway on that balance as possible to take advantage of the interest-free period.

8. Make Your Balance Transfer

Sometimes you can request to do a balance transfer during your card application online. If this isn’t an option or you decide to do it later, contact the bank that issued your new card to initiate the transfer. You’ll need to provide information about the card you’re looking to transfer a balance from including the name of the issuing bank, the account number and the amount you’d like to move to the new card.

It can take anywhere from five days to as long as six weeks to complete the transfer, depending on the policies of both the bank you’re transferring a balance to and the bank you’re transferring from. Make sure to stay current on the card you’re transferring from in order to avoid a late payment fee.

It takes time and discipline to whittle away at high-interest credit card debt. A balance transfer can help give you a leg up towards reducing that financial burden, but it’s not a perfect solution. If you think that you can pay off your debts in two years or less, a balance transfer card could be a great way to reduce your interest cost along the way. But for longer repayment periods, a different financing solution such as a debt consolidation loan may be a better choice.