How Balance Transfer Credit Cards Work

A balance transfer moves debt from one or more credit cards to a new card, usually to take advantage of a lower or 0% introductory APR. The debt does not disappear; it simply sits on a new account where less of each payment goes to interest. Understanding the moving parts helps you decide whether a transfer will actually save you money.

The three numbers that decide whether a transfer is worth it

• The introductory APR and its length. Offers are expressed as a rate for a set number of months from account opening. A longer period gives you more time to pay down the balance.
• The balance transfer fee. Most issuers charge a percentage of each amount transferred, added to your new balance. A fee of a few percent can still be far cheaper than months of interest at a typical card APR, but it is not free.
• The regular APR afterwards. Whatever remains when the introductory period ends begins accruing interest at the card’s standard variable rate.

Deadlines and limits

Introductory transfer rates usually apply only to transfers completed within a window after you open the account, often the first few months. Transfers made later may get the regular APR. The amount you can move is also limited by your new credit line, and issuers generally will not let you transfer a balance between two cards they issue.

Build a payoff plan before you apply

Divide the total you plan to transfer, plus the transfer fee, by the number of months in the introductory period. That monthly figure is what you need to pay to clear the balance before the standard rate begins. If the number is not realistic, a longer offer, a smaller transfer or a different approach may suit you better.

Common mistakes to avoid

• Using the new card for everyday purchases. New purchases may not get the 0% rate, and payments are often applied in ways that leave higher-rate balances outstanding longer.
• Missing a payment. A late payment can bring a late fee and, depending on the card’s terms, may affect the introductory rate.
• Running the old cards back up. A transfer only helps if the old accounts stay paid down.

How a transfer can affect your credit

Applying for a new card typically means a hard inquiry, which can lower your score slightly for a short time. Over time, a lower overall utilization rate and a record of on-time payments can help. Closing old accounts after a transfer reduces your total available credit, so consider keeping no-fee accounts open.

Confirm the terms

Introductory periods, fees and eligibility rules vary between cards and change over time. Read the issuer’s current pricing and terms before you apply; they take precedence over any summary, including the card pages on this site.