A balance transfer moves debt from one card to another, often to take advantage of a low or 0% introductory rate. It can save interest if you have a repayment plan.
Disclaimer: This article is for general educational purposes only and is not financial advice. Card terms, fees and rates vary by issuer and country, so always read the official terms or speak with a qualified adviser before applying.
How It Works
- You apply for a card offering a promotional transfer rate.
- The new issuer pays off the old card balance.
- You repay the new card, ideally before the promo period ends.
Costs to Consider
- Transfer fee, often 3% to 5% of the amount.
- The rate after the promo ends.
- New purchases may have a different APR.
Is It Worth It?
Compare the transfer fee with the interest you would pay otherwise. Divide the balance by the promo months to see the monthly payment needed.
Mistakes to Avoid
- Running up the old card again.
- Missing a payment, which may end the promo rate.
- Ignoring the end date.
Frequently Asked Questions
Can I transfer between cards from the same bank?
Usually not; most issuers only accept transfers from other banks.
Does a transfer hurt my credit?
The application causes a hard inquiry, but lower interest can help you repay faster.
Conclusion
A balance transfer is a tool, not a fix; it works best with a clear plan to clear the debt within the promo period.
