Credit Card Balance Transfers: How They Work In 5 Easy Steps

Credit card balance transfers (explained)

Credit card balance transfers are often used by consumers who want to transfer the amount they owe to a credit card with a significantly lower promotional interest rate and better benefits, such as a rewards program for cash back or points for daily spending.

What is a credit card with balance transfer? Many credit card companies forgo balance transfer fees to attract cardholders.

Often, they can also offer a promotional or introductory period of six to about 18 months in which no interest is charged on the transferred amount.

Potential problems for the cardholder

The challenge of transferring a balance means carrying a monthly balance, and carrying a monthly balance involves making timely payments of at least the minimum due on the transfer for any new purchases. Otherwise, you could end up losing the introductory credit card APR on your transferred balances along with the grace period, and incur surprise interest charges on new purchases.

With care, smart consumers can take advantage of these incentives and avoid high interest rates while paying off their debts.

Also, a history of late payments, a low credit score, or a bankruptcy declaration by the cardholder can result in a decrease in the transfer.

Where to look for a credit card with balance transfer promo

If you’re looking at a credit card comparison website, be aware that these sites genecredit card debtrally get referral fees from credit card companies when a customer applies for a card through the website and is approved. Additionally, some credit card companies have influenced the information that websites post.

How to make a credit card balance transfer with 0 interest?

After getting approved for a card with a 0% interest balance transfer offer, find out if the 0% rate is automatic or dependent on a credit check. The next step is to determine which balances to transfer. Then calculate the transfer fee. Is there a quantity limit on the fee? If not, that may make transferring larger balances worthwhile.

Requesting a balance transfer

Although it is called a balance transfer, one credit card actually pays another. Mechanics include:

  • Balance Transfer Checks – The new card issuer provides checks to the cardholder. The cardholder makes the check to the card company he wishes to pay. Some credit card companies will allow the cardholder to write the check for them.
  • Online or phone transfers – The cardholder provides the account information and the amount to the credit card company to which they are transferring the balance and that company arranges the transfer of funds to pay the account.

Transfers to existing cards

However, this can be tricky if the existing card already has a balance and the transfer will only add to it.

Also consider what will add a large sum to a card’s credit utilization rate, that is, the percentage of available credit that has been used, which is a key component of your credit score.

Comparison with personal loans for credit card debt

Some financial advisers consider credit card balance transfers to make sense only if the cardholder can pay all or most of the debt during the promotional rate period. After that period ends, a cardholder will likely face another high interest rate on their balance, much like the interest rates of payday loans.


Transferring credit card debt should be a tool to eliminate debt quickly and spend less money on interest without incurring fees or hurting your credit rating. Once you clearly understand the terms, calculate well before transferring, and create a realistic payment plan, taking advantage of 0% interest on a new card could be a smart move. As long as you do your research, you shouldn’t have a problem finding the right balance transfer card for you.

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