You’ve probably heard of a credit card balance transfer. But how does one proceed? And how can a balance transfer save you money on your next credit card bill?
These are the types of questions we receive from people new to the world of credit cards, and we have answers. So keep reading to find out how balance transfers work, including the associated fees and how long a typical balance transfer takes.
What is a balance transfer?
A balance transfer is a transaction that moves debt from one credit card account to another. The idea is to save money on interest by transferring your balance from a high-interest card to a lower-interest card.
For example, you may be able to pay off a credit card balance without incurring interest charges by transferring the debt from your regular credit card to a balance transfer credit card with a 0% annual percentage rate (APR).
What is a balance transfer credit card?
A balance transfer credit card is a credit card that allows you to transfer balances from other accounts. Most balance transfer credit cards offer a 0% introductory APR to encourage transfers.
Some issuers also let you transfer other types of debt, such as car, student and personal loans, to your balance transfer card.
Please note that balance transfers have different fees and restrictions. Generally, you will have to pay a balance transfer fee of 3%-5% of the total amount transferred. And your card may set a limit on the transfer amount.
Additionally, transfers from the same issuer (for example, transfers from one Chase card to another) are generally not allowed.
How to Transfer a Credit Card Balance
The exact steps for transferring credit card balances vary by issuer.
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The first step is to apply for (and obtain) a balance transfer credit card, preferably with a 0% introductory APR. Check out our list of the best personal cards and business cards for balance transfers for options.
Then initiate a balance transfer with your card issuer. This can usually be done online or by telephone, and you will need to provide details such as the name of the issuing company and the type and amount of debt you want to transfer. Some balance transfers can also be initiated through convenience checks.
Once requested, you wait to see if the transfer is approved. This may take two weeks or more. If approved, the issuer will usually pay off your old bill directly. The old balance – plus the balance transfer fee – will appear in your new account.
Finally, pay off the balance and save on interest payments.
In short
Balance transfers involve moving debt from one credit card to another. The best way to do this is with a balance transfer card. Once you have the correct card in hand, contact your card issuer to transfer the balance. This may take two weeks or more. The goal is for you to save on interest payments in the long run.
Related: How to Make a Balance Transfer