How to do a balance transfer

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A balance transfer can be a valuable tool if you’re struggling with high-interest debt. Many credit card issuers offer balance transfer cards with introductory zero-interest periods that allow you to transfer various credit card debts to a new credit card and use the introductory period to pay down what you owe interest-free.

With the right balance transfer credit card and the right 0 percent APR introductory offer, you have a chance to pay off your transferred balances in full while temporarily avoiding costly interest charges.

First, though, you probably have questions. How do you transfer a credit card balance? How do you choose the right balance transfer card? Here are the answers that can help you get the job done in five steps:

  1. Make sure a balance transfer is the right plan for you
  2. Compare balance transfer credit cards
  3. Get ready for the application process
  4. Transfer a balance to the new credit card
  5. Create a debt payoff plan

1. Make sure a balance transfer is the right plan for you

A balance transfer credit card will benefit you most if you have high-interest debt and need more time to pay it off. Before you get started, take a close look at your situation to see if you’re in the right position to do a balance transfer.

Is the debt you want to transfer less than $10,000?

A balance transfer is ideal when it involves less than $10,000 in debt, whether on a single credit card, multiple cards or different types of credit accounts. You typically can’t transfer a balance higher than your credit limit, and $10,000 is at the high end for most consumers. If your debt exceeds $10,000, you have a couple of options:

  • With multiple debts, you can prioritize the biggest one with the highest interest rate for the balance transfer
  • With one large debt, you can transfer as much of it as you can to the new card

In either case, diligently paying down whatever balance you’re able to transfer could still help you save money on interest charges.

Do you have a good credit score?

Qualifying for a top-rated balance transfer credit card is generally easier if you have a good or excellent FICO Score (between 670 and 850). You might still be able to find a balance transfer credit card with a credit score below 670, but it will probably have a shorter intro APR period. Check your credit score before you start shopping to get a better idea of which cards you might qualify for.

What are the possible alternatives?

Like many things involving your personal finances, balance transfers have pros and cons. If the amount of your debt, your credit score or both don’t fit the ideal conditions, you could consider:

  • A personal loan. A loan won’t have an introductory zero-interest offer, but it might be easier to qualify for with less than perfect credit.
  • A balance transfer card for bad credit. Although you might get a shorter introductory offer that’s low-interest rather than zero-interest, you’re still likely to find the terms more favorable than your current high-interest debt.

2. Compare balance transfer credit cards

You can do all or most of your comparison shopping online by checking out credit card issuer and marketplace websites. Another option is to check with your bank or credit union.

Things to look for when comparing balance transfer cards include:

  • Length of intro APR offer: Most balance transfer cards offer 0 percent interest for over a year. The longer this temporary interest-free window lasts, the longer you can avoid costly credit card APRs. Also, note each card’s regular APR since your interest rate will convert to that rate once the intro APR offer ends.
  • Types of debt you can transfer: Most balance transfers involve moving debt from one credit card to a new card, but some issuers allow you to transfer from multiple cards. You might also be able to transfer balances from different types of credit accounts, including cards, car loans and student loans, although this is less common. Check the card’s terms and conditions to make sure it can accommodate the type of debt you’re looking to transfer.
  • Balance transfer fee: Some balance transfer cards charge an upfront fee of 3 percent to 5 percent of your balance. This means that if you transfer $5,000 in debt to a balance transfer card, you’ll pay an extra $150 to $250. A few credit cards don’t charge balance transfer fees, although these no-fee transfers often come at the cost of a shorter introductory APR period.

3. Get ready for the application process

You can apply for a balance transfer card online in a matter of minutes. You’ll need to provide some basic personal and financial data such as your name, address, Social Security number and income.

In some cases, you can begin the process of transferring balances as part of your application. The balance transfer credit card application may ask you which balances you are planning to transfer to the new card, so make sure you have that information ready.

After you apply for your new balance transfer card, you can typically get an answer in minutes. If you aren’t notified of your approval right away, you may have to wait for an email from the credit card company. Learning that your credit card application is “pending” or “under review” can be nerve-racking, but be patient—in most cases, you’ll hear back from your credit issuer within a few days.

4. Transfer a balance to the new credit card

Once your application for your balance transfer credit card is approved, it’s time to transfer the balance. While each credit card issuer’s balance transfer process is slightly different, in most cases you’ll be able to transfer your balances either over the phone or online.

The process of transferring a balance is typically easy. All you’ll need to do is provide basic information about the credit cards you plan to transfer the balances from, including the card numbers and the amounts you’d like to transfer to your new credit card. If you need additional help learning how to transfer a credit card balance, review your credit issuer’s online resources or call customer service for assistance.

Keep in mind that balance transfers take time. It can take anywhere from a week to a month for your balance to be transferred. It’s important to keep making payments on your old cards until your balances have been fully moved over to your new 0 percent APR credit card. Once your balance transfer is complete, be sure to follow up with your old cards and loans to make sure they show a $0 balance before you stop making payments.

Balance transfer guides by credit card issuer

5. Create a debt payoff plan

Now it’s time to put the introductory offer to good use. Having some time without any interest being charged puts you in a great position to eliminate your debt at a brisk rate. The more money you can put toward your transferred balance each month, the faster you’ll get out of debt. Remember that each dollar you pay during your 0 percent APR period has a bigger impact since 100 percent of it goes toward the balance you owe, not interest payments.

Take a look at your monthly budget in comparison to your salary—money going out versus money going in—and identify any areas where you can reduce spending, at least temporarily. Controlling spending will help you get a handle on your current debt, and developing this good habit should help you avoid debt in the future.