Need another balance transfer? Don’t feel ashamed

When it comes to reducing high-interest credit card debt while paying little to no interest, a balance transfer is one of the most effective tools — but only if handled with care. That is particularly important if you plan to complete multiple balance transfers at once or if you make one balance transfer after another, as the low- or no-interest balance transfer offer lasts for a certain time. During this introductory period, which typically lasts up to 21 months, many balance transfers provide a 0 percent APR.

After the attractive balance transfer interest rate offer expires, a much higher APR kicks in. If you are unable to pay off the transferred balance before the low- to no-interest window closes, you will once again be paying a high interest rate on what you owe. But if you are responsible about how you handle the transferred debt, a balance transfer can be a smart move to reduce or eliminate high-interest credit card debt. And, you may not have to apply for a new card to get this type of offer. You may be able to score one with a new or existing card.

Still, balance transfers can carry risks and rewards, and before you opt for one, it’s important to understand the basics of balance transfers, including the risks and alternatives.

Can you do multiple balance transfers?

Yes, you can do multiple balance transfers or transfer a balance from one 0 percent APR card to another. Multiple transfers might be possible from several cards to one card or even several cards to several cards.

A transfer often involves the amount of money you borrow from one card being applied electronically to the balance of another card. You also might be able to cover non-credit card debts by using a balance transfer check or a balance transfer deposit to a checking account.

Keep in mind that the number of balance transfers likely will be restricted by the amount of credit available on a balance transfer card (subtracted by any existing balance). In some cases, balance transfer credit limits are lower than the credit limits for traditional card transactions.

In addition, if you apply for several new balance transfer cards around the same time, your borrowing power could be curbed by your creditworthiness. You also may be held back by a card issuer’s own rules on the number of balance transfers it allows.

What are the risks of multiple balance transfers?

Some cardholders can and do make multiple balance transfers work for them. But if you’re looking into multiple transfers, be sure to weigh these risks:

• Transfer fees. Fees for balance transfers are typically 3 percent or 5 percent of the transfer amount, with a typical minimum fee of $5 or $10. If you’ve carrying out multiple balance transfers, these fees can add up. “It is important to consider these fees when looking to transfer one card balance to another, and not only consider the introductory interest rate,” says Jim Triggs, president and CEO of Money Management International, a nonprofit consumer credit counseling agency.
• Credit inquiries. If you’re applying for a few balance transfer cards around the same time, every inquiry from a credit card issuer will show up on your credit report. This could multiply the temporary, minimal impact of a credit inquiry on your credit score.
• More payments. So, let’s say you’ve been approved for a couple of new balance transfer cards. In the long run, this could help you erase some or all of your high-interest credit card debt. But in the short term, it could mean keeping track of yet more monthly bills.
• Failure to address the real issue. Sure, a balance transfer might ease your financial burden. But it may not help you tackle serious issues with your finances, such as constant overspending.

“Balance transfers from one credit card to another can be a good way to save money in interest charges while paying off a credit card balance,” Triggs says. “However, if a consumer is using balance transfers to consistently move balances from one card to another in order to avoid making payments on the card or at least put off payment for a while, they will eventually run into issues.”

If you do take advantage of balance transfers, Triggs advises paying attention to when the low- or no-interest period ends and what the interest rate will be if you haven’t paid off the transferred balance before the period expires.

For instance, you may enjoy a 0 percent intro APR for 15 months. But after 15 months, the APR on the transferred balance will climb to the usual higher rate, which likely will be in the double digits. As of July 2023, the average credit card interest rate was over 20 percent.

When it comes to balance transfers, the payment of fees and the potential payment of higher interest rates “are pitfalls that are not commonly seen,” says credit coach Jeanne Kelly.

Balance transfer alternatives

While a balance transfer can be a good option for whittling down your high-interest debts, it isn’t the only option. Here are four alternatives to balance transfers.

1. Budgeting. Getting a handle on high-interest debt may boil down to one simple step — creating a monthly budget. A monthly budget tracks your income and your regular expenses, such as rent, credit card payments, loan payments and utilities. You may decide to set up your budget the old-fashioned way, with pencil and paper. Or you might turn to technology, either a budgeting spreadsheet or budgeting app.
2. Debt consolidation. You may be able to combine several high-interest debts into a single debt consolidation loan (and a single monthly payment). If you go down this path, aim for an interest rate on the loan that’ll wind up saving you money on interest charges.
3. Debt counseling. A nonprofit consumer credit counseling agency can go over your finances, working with you on setting up a monthly budget and coming up with solutions to ease your debt burden. One of those solutions might be a debt management plan. This type of plan is designed to pay off unsecured debts, such as credit cards, at lower interest rates. You make one monthly payment over a period of up to five years to erase the debt.
4. Debt relief. A for-profit debt relief company promises to negotiate with your creditors to decrease the amount of debt you owe (typically unsecured debts like credit cards). Personal finance experts warn that debt relief is a last resort due to the many drawbacks, such as high fees, possible scams and potentially serious damage to your credit score.

How to break the cycle if you’re on a second balance transfer

Although doing multiple balance transfers might be a good approach to chipping away at high-interest debt, they also might be masking a deeper problem with your finances.

“You cannot borrow your way out of debt. Moving balances for better interest rates may be helpful temporarily, but it will not solve your debt challenges if you are dealing with too much overall debt,” Triggs says.

So, how can you get the cycle of second, third or fourth balance transfers?

Triggs recommends putting together (and sticking to) a plan to pay off your high-interest debts that may involve a balance transfer but doesn’t necessarily depend on it.

“A consumer is never guaranteed the ability to open a new line of credit to transfer balances to. If the economy gets worse and credit tightens further, new lines of credit, especially for struggling consumers, may be harder to come by,” he says.

Kelly says you must prioritize debt reduction in order to escape the cycle of balance transfers. If you’re not aggressive about paying down a transferred balance, “the debt will just continue to grow,” she says.

Consider a debt consolidation loan

One component of your debt reduction plan could be a debt consolidation loan (a type of personal loan), Triggs says. But that’s only if you qualify for a loan with a lower interest rate than your credit card or cards are charging.

A debt consolidation loan gives you “the ability to make the same payment every month at a fixed interest rate with a fixed loan term, usually between 36 and 60 months,” he says.

If a debt consolidation loan isn’t available, Triggs suggests seeking help from a nonprofit consumer credit counseling agency like Money Management International.

The bottom line

A balance transfer lets you pay off debt without worrying so much about double-digit interest rates. In the end, a balance transfer can help keep your credit healthy.

But if you make a habit of frequent balance transfers, you may need to go beyond what is a financial Band-Aid to diagnose and treat more serious financial wounds. Fortunately, options like debt consolidation loans and debt counseling can help resuscitate your credit.