Key takeaways

  • Balance transfer credit cards can help you pay off debt faster since they typically offer a 0 percent intro APR period that helps you save on interest payments for a limited time.
  • Choose a card that will provide you with enough time to pay off your debt interest-free, and be aware that you will be paying a higher interest rate once the intro APR offer ends.
  • Avoid racking up debt on your new card since that'll defeat the purpose of a balance transfer. It's best to come up with a plan for debt payoff before applying for a card.

Because it’s so easy to rack up balances when shopping with credit cards, 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 20 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.

If you want to pay off your credit card debt once and for all — and stop paying interest for a limited time — a balance transfer credit card can help.

What is a balance transfer credit card?

A balance transfer credit card typically refers to a credit card that includes a 0 percent intro APR offer on balance transfers. With a balance transfer, you’ll move your credit card debt from a credit card with a high interest rate to a credit card with a 0 percent intro APR for a limited time (usually between 12 and 21 months). The goal is to then pay off your credit card debt entirely during the introductory period.

In instances where paying off debt the old-fashioned way seems insurmountable, a balance transfer credit card could be the tool you need. When you transfer debt to a balance transfer credit card, you’ll 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 work?

Before applying for a balance transfer credit card, note that you’ll typically need good to excellent credit to qualify for a card. Additionally, you typically can’t transfer a balance from one card to another card with the same issuer.

When you apply for a balance transfer credit card, you’ll be asked (during the application process) if you have any balances to transfer to your new card upon approval. If you don’t transfer a balance during the application process, you’ll typically have between 60 and 90 days to transfer a balance to your new balance transfer card before the 0 percent intro APR offer expires.

When you’re ready to transfer a balance, you’ll then enter the account number of each credit account you’d like to transfer a balance from, as well as the amount of money you want to move to your new balance transfer credit card. You’ll also typically need to pay a balance transfer fee, which generally ranges from 3 percent to 5 percent (with at least a $5 minimum usually) 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’ve 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 balance transfer credit card?

Balance transfer credit cards allow you to transfer high interest debt from one credit card to another credit card, but some issuers also allow you to move other types of debt, such as car loans, student loans and personal loans.

Although many issuers will allow you to transfer different types of debt to a balance transfer credit card, most issuers won’t allow debt transfers from different internal accounts. But before you assume this to be true for your issuer, confirm with your credit card company directly.

Pros of balance transfer credit cards

  • Pay zero interest for a limited time. With a balance transfer credit card with a 0 percent intro APR, you can stop paying interest for up to 21 months. This means you can save hundreds or even thousands of dollars in interest payments as you pay down debt.
  • Simplify repayment. A balance transfer credit card lets you move several different accounts to one new account, which means you can pay one large bill each month instead of several small bills.
  • 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 transfer credit cards

  • Balance transfer fees apply. You’ll typically need to pay an upfront fee that’s equal to 3 percent or 5 percent of the balance you want to transfer, which can eat away at your interest savings. While there are a few cards with no balance transfer fee, these cards are usually only available through credit unions.
  • Introductory APR offers don’t last forever. The longest balance transfer offers last for 18 to 21 months, but some offers 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 and a plan to pay down debt.

Is a balance transfer credit card right for you?

Do you have a lot of high interest credit card debt?

Balance transfers are best for those with a lot of high interest debt to pay down. By moving debt to a new credit card with a 0 percent intro APR offer, you’ll get the chance to save money on interest and pay down the balance at a much faster pace.

Do you need some time to pay off a recent large purchase?

If you want a little extra time to pay off a particular balance — perhaps you recently made a large purchase with a different credit card — applying for a balance transfer credit card with a 0 percent intro APR offer might be the right move. If you can manage to pay off your balance before the 0 percent intro APR offer ends, you will successfully dodge any interest that may otherwise have been added to your balance.

Would you rather focus on one balance?

If juggling multiple balances at once gets to be too much, you might want to consider transferring multiple balances to one credit card. By consolidating multiple balances into one, you will only have one payment to keep up with.

Are you ready to commit to a debt payoff plan?

Some people get balance transfer credit cards with good intentions but then find themselves racking up new balances on their new 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.

Would a personal loan work better for your needs?

If the amount of debt you have is larger than your new potential credit limit, or if you have a lower credit score or need a longer debt 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

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 intro APR offer can help you save on interest and pay down debt. But first, you should go through all of your bills to find out exactly how much you owe and to whom. Then, compare all the top balance transfer credit cards on the market today to find a card that would work best for you and your debt payoff plan.

If you’re deep in debt, you’ll need to face the details of your situation head-on. You’ll 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.