What is a balance transfer credit card and how does it work?

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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 16 percent, many people find themselves paying so much interest on their balances that it can take years, or even decades, to pay their debt off.

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.

How do balance transfers credit cards work?

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 transferred in full and any final interest charges have been paid off.

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, 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 that’s usually 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.
  • 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 band-aid 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 that your situation won’t improve without changes to your spending habits.

How to choose a balance transfer credit card

Picking the right card for a balance transfer takes a little time, but the process could help you avoid false starts and missteps along the way.

  1. Take a close look at your debt: Make a list of each debt you owe along with its respective interest rate or APR.
  2. Check your credit score: Many of the top balance transfer cards are designed for people with good credit or excellent credit, but there are also balance transfer options available for people with less-than-good credit.
  3. Compare cards and offers: Consider the length of the introductory offer, terms and conditions (like completing the balance transfer within a certain time period), the card’s regular APR and any rewards or card perks to deliver ongoing value beyond your intro APR period.
  4. Do the math: Use Bankrate’s Credit Card Balance Transfer Calculator to see estimated interest payments and compare the timelines for paying off your debt.

How to complete a balance transfer

Requesting a credit card balance transfer is relatively simple. It is important to consider the following steps when completing your first balance transfer:

  1. Apply for a balance transfer card. Once you have found a balance transfer card with terms you are happy with, you should take the steps required to apply. This involves sharing basic personal and financial data such as your name, address, Social Security number, employment situation and income. Most of the time, you’ll find out if you are approved for an account in a matter of minutes.
  2. Initiate the balance transfer. When you apply online, you may also have the chance to initiate your balance transfers right away. This typically means entering the credit card numbers and account information for each balance you want to transfer, as well as the issuing bank and its mailing information. If you don’t want to transfer balances online or you already have a balance transfer card you want to use, you can also call the number on the back of your card to start the transfer. In this case, you’ll share the account information and balance transfer amounts with a customer service representative.
  3. Continue to pay off your debt. Once your balance transfer is underway, keep in mind that it can take one week or up to a month for your balance transfer to be complete. You’ll want to keep making payments on your old accounts during that time and only stop paying on existing credit cards once you have confirmed your balances have been transferred and old accounts show a $0 balance.

How to do a balance transfer, by issuer

The balance transfer process can vary slightly by issuer. The following guides can help you transfer balances without any problems:

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, you 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 debt-free, 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.

Written by
Holly D. Johnson
Author, Award-Winning Writer
Holly Johnson writes expert content on personal finance, credit cards, loyalty and insurance topics. In addition to writing for Bankrate and CreditCards.com, Johnson does ongoing work for clients that include CNN, Forbes Advisor, LendingTree, Time Magazine and more.
Edited by
Associate Editor