How to do a balance transfer in 5 steps
If you’re struggling to keep up with credit card debt or other bills, a balance transfer credit card may be just what you need. Most of these credit card offers come with 0% APR for up to 21 months, which may buy you enough time to drastically reduce your debts without paying interest.
Balance transfer cards work just how they sound: you transfer an existing credit card balance to a new credit card – one that has 0% or low interest for an introductory period. This can help you pay off a large balance more quickly and avoid accruing racking up additional interest charges along the way.
If your goal is becoming debt-free and you think a balance transfer card could help, you’ll want to take the appropriate steps to ensure your transfer goes off without a hitch. Here’s a step-by-step guide to transferring a balance and paying down your debt:
Tally up your debts and check your credit scoreBefore you can use a balance transfer card to get out of debt, you have to figure out what you owe. Take the time to tally up all your debts one by one, making a list of each balance and its respective interest rate.
If your score is below that, you may not qualify for a balance transfer card with the best rates and terms.
- Step 2: Compare balance transfer offersOnce you have confirmed your credit is good or great, you’ll want to compare balance transfer offers. Make sure you understand how long the introductory 0% APR period lasts and read the fine print. Also make sure you understand any balance transfer fees charged, which may tack on 3% to 5% of your total balance upfront.
Step 3: Apply for a balance transfer card and transfer your balanceLook for a card with the longest 0% offer you can find, along with low or no fees. From there, you can apply online. After your application is approved, the card issuer will allow you to share your balance transfer information on the phone or via their secure website and handle the transfer for you.
Still, you should never assume your total credit card balances from your older cards fully transferred to your new one without confirming. To avoid a credit mishap, you’ll want to check all of your old cards and loan balances to make sure they are at $0 before you stop making monthly payments.
Step 4: Create your debt repayment planWith a new balance transfer card on its way, you’ll want to create a plan of attack. In other words, ask yourself how much you would need to pay each month to pay down most your debt during your card’s introductory offer.
Imagine you owe $5,000 in total debt and owe a 3% balance transfer fee on a new card with 0% APR for 21 months. In that case, you would need to pay at least $245 per month for 21 months to pay down the full $5,150 before your interest rate resets.
- Step 5: Follow your debt repayment planOnce your debts have been transferred to your new credit card, you’ll want to start following your debt repayment plan right away. Make sure to pay as much as you can toward your debts every month to ensure you wipe out all the debt you can.
Remember that 0% APR isn’t forever and that your interest rate will reset much higher later on. Balance transfer cards can make debt repayment easier, but you have to do the work.
If you are ready to move forward in the balance transfer process, you can apply for a balance transfer card here.