A balance transfer credit card is any credit card that lets you transfer balances from other accounts. Most of the time, balance transfer credit cards offer consumers an introductory 0 percent APR — or zero interest — on their balance for a limited time (usually between 12 and 21 months).

Because it’s so easy to rack up balances when you shop with a credit card, some consumers end up in a position where they have a large amount of debt to pay off. And since the average credit card interest rate is currently over 19 percent, many people find themselves paying so much interest on their balances that it can take years, or even decades, to pay off their debt.

In these instances where paying off debt the old-fashioned way seems insurmountable, a balance transfer card could be the tool you need.

When you transfer debt to a balance transfer credit card, you begin saving money on interest right away. Not only that, but every dollar you pay toward the credit card bill will go directly to the principal balance you owe. For that reason, a balance transfer credit card can be a valuable tool for those looking to get out of debt.

What is a balance transfer credit card?

When you apply for a balance transfer credit card, you’ll be able to indicate which balances you’d like to transfer to the card upon approval. Then, you’ll enter the account number from each credit account you’d like to transfer, as well as the amount of money you plan to move to your new balance transfer credit card.

In order to complete the balance transfer, you’ll likely also need to pay a balance transfer fee of 3 percent to 5 percent (usually with at least a $5 minimum) on every balance you transfer to your new card.

Note that it generally takes between one week and one month to transfer a balance to a new balance transfer card. Be sure to make regular payments on all of your existing credit cards until you have confirmed that your balances have been transferred in full and any final interest charges have been paid off.

What kinds of debt can be transferred to a credit card?

Balance transfer credit cards allow you to transfer high-interest debt from one card to another, but some issuers allow you to move different types of debt, such as car loans, student loans and personal loans. Many issuers allow you to transfer different types of debt to a balance transfer credit card, but most issuers won’t allow debt transfers from different internal accounts. Before you assume this to be true with your issuer, confirm with your credit card company directly.

Pros of balance transfers

  • Pay zero interest for a limited time: With the right balance transfer credit card, you can save money on interest for up to 21 months. This means you can save hundreds or even thousands of dollars as you pay down debt.
  • Simplify repayment: A balance transfer credit card lets you move several different accounts to one new one, which means you can pay one large bill each month instead of several small ones.
  • Pay down debt faster: Without any interest charges accruing each month, every cent of your payment goes toward your principal balance. This means you can pay down debt faster and with less effort.
  • Access other cardholder perks: Some balance transfer cards come with additional benefits, like consumer protections and the ability to earn rewards.
  • Improve your credit score: A balance transfer could improve your credit score. When you open a new line of credit, you’ll generally see your credit utilization ratio improve. If you make regular monthly payments on your transferred balances without taking on any new debt, your credit utilization ratio will continue to go down — meaning your credit score should continue to go up.

Cons of balance transfers

  • Balance transfer fees apply: You’ll typically need to pay an upfront fee equal to 3 percent or 5 percent of your balance, which can eat away at your interest savings. However, there are a few cards with no balance transfer fee on the market. Here are our picks for the best balance transfer cards with no balance transfer fee.
  • Introductory offers don’t last forever: The longest balance transfer offers last for 18 or 21 months, and some only last for 12 months. After your introductory APR period ends, you’ll start paying your credit card’s regular variable APR on any remaining balance.
  • Balance transfers can be a quick fix for a larger problem: If you have an issue with overusing credit cards, a balance transfer credit card could hurt more than it helps. Always remember that balance transfers only move debt around, and your situation won’t improve without changes to your spending habits.

Who should get a balance transfer credit card?

If you have a mountain of high-interest credit card debt you can’t seem to get under control, a balance transfer credit card with a 0 percent APR offer can surely help you save a bit on interest. Also, know you aren’t alone. According to data from The Federal Reserve, in the 12 months leading up to May 2021, nearly half of all credit card users carried a balance at least once. And card balances are on the rise.

  • The debt reducer: Interest rates are hovering above 19 percent, so if you’re looking for a way to pay down credit card debt, you aren’t the only one looking for a solution. Balance transfer credit cards are a solid idea for individuals looking for a way to cut down on mounting debt with a 0 percent intro APR offer.
  • The quick payer: If you want a little extra time to pay off a particular balance (perhaps you recently made a large purchase), a balance transfer credit card may be the right move. If you can manage to pay off your balance before the 0 percent APR period ends, you will successfully dodge any interest that may otherwise be added to your balance.
  • The consolidator: If you are someone who prefers to stay organized and juggling multiple balances at once gets to be too much, you may consider transferring multiple balances to one card. By consolidating multiple balances into one, you will only have one payment to keep up with.

Is a balance transfer right for me?

Balance transfers are best for those with a lot of high-interest debt to pay down. By moving debts to a new credit card that extends a 0 percent APR for a limited time, you get the chance to save money on interest and pay down the balance at a much faster pace.

That said, some people take out balance transfer credit cards with good intentions but find themselves racking up new balances on their credit cards (even as they work to pay their old balances off). If you’re not ready to commit to paying off your credit card debt without taking on new debt, a balance transfer credit card might not be the right option for you. At the end of the day, your success with a balance transfer credit card depends largely on how you use it and how prepared you are for the debt repayment process.

If you have a debt larger than your potential new credit limit, have a lower credit score or need a longer payoff plan, it’s worth considering a personal loan. Although you’re unlikely to get a 0 percent intro APR on a personal loan, interest rates on standard personal loans from banks and other financial institutions tend to be a lot lower than credit card interest rates. If it’s going to take you a while to pay off your debt, you may be better off with a personal loan.

The bottom line

Figuring out what a balance transfer is could be the first step to becoming free of debt, but do your research. For example, you should compare all the top balance transfer credit cards on the market today and go through all your bills to find out exactly how much you owe and to whom.

If you’re deep in debt, you’ll need to face the details of your situation head-on. You’ll also want to create a plan that helps you avoid using credit cards and racking up more debt along the way. A balance transfer can help you get where you want to be much faster, but only if you’re honest with yourself.