If you’re new to the world of credit cards, you’re probably thinking about balance transfers.
In short, it is a type of transaction in which debt is moved from one credit card account to another. If used correctly, a balance transfer can save you money on interest payments because you’re transferring your balance from a higher-interest card to a lower-interest card.
If you’re curious about how to transfer a balance, here’s a quick guide to get you started.
Find a balance transfer card for you
Whether for personal use or for business, only certain credit cards are eligible Balance Transfer.
Many balance transfer credit cards offer benefits such as extended 0% annual percentage rate (APR) introductory periods, some cash-back rewards and welcome offers.
If you don’t already have one, you may want to find and apply for a balance transfer card that works for you.
Here are some things you may want to consider:
- Initial APR Period Duration: The card will switch to a higher variable APR after the introductory period if you haven’t paid off the transfer balance in full.
- Balance Transfer Fee: These are the costs of executing your transfer, usually around 3% to 5%.
- How long does it take to complete the transfer: Consider how quickly you need the transfer; Most issuers take between 5-7 days, while others can take up to 21 days. Additionally, ensure that no payment is missed while your transfer is being executed.
This Citi Double Cash® Card (see rates and fees), for example, offers an 18-month introductory 0% APR period for balance transfers, plus a solid cash-back earning rate, meaning you don’t have to sacrifice rewards on future purchases just to consolidate your debt. . .
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After the initial balance fee offer ends, a variable APR between 18.74% and 28.74% will apply. A 3% initial balance transfer fee will apply within the first four months of opening your account. Initial Balance Transfer Fee After the offer ends, the fee for future balance transfers is 5%.
There is also Bank of America® Customized Cash Rewards Credit CardWhich offers 0% introductory APR for purchases for 15 billing cycles and for any balance transfers made within the first 60 days.
After the introductory APR offer ends, a variable APR between 18.74% – 28.74% will apply. A 3% initial balance transfer fee will apply for the first 60 days your account is open. Initial Balance Transfer Fee After the offer ends, the fee for future balance transfers is 4%.
Our guide to the best balance transfer cards will give you a good idea of where to start.
Related: Citi Double Cash Credit Card Review and Bank of America Customized Cash Review
How to do a balance transfer
Once you have the right card, you’ll want to request a balance transfer. This is done by contacting the issuer of your balance transfer card — not The card issuer from which you are transferring the balance.
The exact process for requesting a balance transfer varies by issuer, but can usually be done online or by phone. Also, keep in mind that some cards have transfer balance limits, meaning you won’t always be able to transfer the full balance to your card.
Wait for the balance to transfer
Next, you wait until you get a confirmation that the transfer has been successful.
Again, the exact wait time varies by issuer, and it can take up to two weeks or more for the issuer to approve and process the balance transfer. This means additional payments may be made on the debt you are trying to move while you wait for the transfer to be finalized.
With major issuers, balance transfers are usually done directly. This means that the issuer will post a payment directly to your old account for the approved amount, and then that amount (plus any applicable transfer fees) will appear on your new account.
Pay the balance on your balance transfer card
Finally, you’ll want to make timely payments to bring down the transferred balance before the introductory period ends so you don’t incur additional interest charges. In some cases, late payments can void the initial period, putting you back at square one.
To avoid racking up credit card interest, try to make it a habit to pay all your cards in full and on time — one of our The 10 Commandments of Credit Card Rewards.
Related: 6 Simple Rules for Avoiding Credit Card Debt
The bottom line
Starting the balance transfer process is fairly easy once you have an idea of what to expect.
Balance transfer credit cards are a great way to pay off debt without worrying about credit card interest rates. Just make sure you pay off the transferred balance before the end of the introductory period.