How a Balance Transfer Works Ultimate Guide [2023]

If you have any kind of debt on which you are paying interest, it’s always a good idea to investigate options that may help you pay less overall or pay off your debt sooner. Balance transfer credit cards can be a good tool for accomplishing both.

Just about any credit card that offers a 0% intro APR or low APR can be worth investigating for the purposes of paying off existing balances you have with other lenders. By having a time period where you’re paying little-to-no credit card interest, you’re able to chip away at your balances much faster, as more of your monthly payment will go toward reducing your debt instead of paying interest.

This guide will introduce you to how balance transfers work, how you can use them to lower your existing debt, and what to look for when you’re researching options for balance transfer credit cards.

How does a balance transfer work?

A balance transfer moves the balance from one type of debt to a credit card that has a 0% intro APR or a low APR rate. You are basically opening a new credit account to pay off other accounts you owe money on, making it a form of debt consolidation. By doing this, you reduce the overall amount of interest you pay on money you borrowed and you’re therefore able to pay off your debt faster.

Many banks allow you to transfer debt of different types to a credit card. These can include balances from other credit cards with high variable APR, personal loans, auto loans, mortgages, medical bills, home equity loans, payday and title loans, and business loans. What you can use a balance transfer credit card for varies from bank to bank, so it’s important to ask about this before opening a new credit card account for the purpose of a balance transfer.

To apply for a new balance transfer card, you will need to provide your contact information, Social Security number, annual income, and other standard information most credit cards require for opening an account. You may also need to provide information about the accounts you’re looking to transfer balances from. This can include the name of the creditor/payee, amount owed, and account numbers.

The bank issuing the credit card you’re applying for will review your application and decide how much your line of credit will be if you’re approved. If you provide specific account information in your application, the bank will directly pay those accounts the amount you specified. If you apply for the card first and then wish to initiate balance transfers, you can usually do so through your online account or by calling customer service.

If the bank can’t make a direct payment to a creditor you are trying to pay with your new line of credit, it may issue you a check or transfer funds to your checking account for you to use to pay your existing card or other debts.

What are introductory APR periods?

Some balance transfer credit cards enable you to get an introductory annual percentage rate (APR). People with good credit or excellent credit may qualify for cards that offer a 0% intro APR. With a 0% intro APR balance transfer, the entire amount of your payment goes toward reducing your debt. This is a great way to supercharge your debt repayment plan.

Even if you don’t get a 0% APR offer, some introductory offers have lower interest rates, usually around 2% or 3%. This is still a good perk to have and can go a long way toward helping you get rid of your credit card debt — even if your credit isn't so great.

Many credit cards have interest-free introductory APRs that last anywhere from six to 24 months. On average, though, it’s common to see introductory periods that are 12 or 18 months long. Once the intro period is over, though, the APR increases the card’s regular rate.

The best practice is to develop a plan to pay off your debt during the intro period before the last month's due date. However, even if you don’t get all the debt paid off, you might still come out ahead since you’ll be able to significantly reduce your balance before the higher rate kicks in.

How a balance transfer helps you get out of debt faster

When your current card has a high APR, and you make only the minimum payment every month, the majority of your payment pays the interest that has accrued during the month, and only a small amount is applied to the balance. This makes paying off that debt take much longer and more expensive as you continue to rack up more interest every month.

To get out of debt the quickest, you want to look for a credit card with a 0% introductory APR on balance transfers. These introductory 0% APR periods typically last for 12 to 18 months. Once you are approved, you can authorize the bank to make payments to one or more of your creditors to pay off the debt you owe.

Now that the old balance is gone and your new credit card is carrying a balance — but your new 0% intro APR is applied to this balance. That means when you make your monthly payments, all of the amounts you’re paying is applied to the balance since you are incurring no interest fees.

Here's how an introductory balance transfer offer could help you out of credit card debt faster:

What it costs to pay off $5,000 in debt with a typical credit card

You have a credit card, and you use it to make a $5,000 purchase. This card has a 17% APR (which is close to the average credit card APR).

Based on the terms of this credit card, your minimum payment is $120.83 for the first month (your minimum payment is the interest accrued plus 1% of the balance, in this case). Of that $120.83 minimum payment, $70.83 pays for the month’s interest, and the remaining $50 is applied to the balance. Your new balance becomes $4,950.

If you continue to make a $120.83 payment for 18 months, you will pay off $1,016.95‬ of the existing credit card balance. If you continue to pay this amount each month, it would take you 63 months or 5.25 years to pay off the total balance, and you will pay $2,579.74 total in interest charges.

What it costs to pay off $5,000 in debt with a balance transfer credit card

Now, if the $5,000 balance is transferred to a 0% intro APR card and you pay the same $120.83 a month when the 18-month introductory period ends, you will have reduced the transferred balance by $2,174.94‬‬. Not only that, but you will have saved $1,016.95 in interest payments during that same time.

By the time your card starts charging you interest, you will have a balance of only $2,825.06. For this example, we’ll say the APR will be 17%, the same as the card you transferred the balance from. Your minimum payment will drop down to $68.27. It would take you 63 months or 5.25 years to pay off the remaining balance at this amount, and you’ll end up paying $1,457.60 in interest.

If you continued to pay the $120.83 per month, you will pay off the balance in 29 months or 2.4 years and only pay $630.72 in interest over the course of the repayment.

What is a balance transfer fee?

Most credit card companies charge a balance transfer fee for paying off a customer’s debts. The typical range is between 3% and 5% of the transferred amount, with many credit card companies also requiring a minimum amount for the fee. You will see this in the chart below when we discuss our recommended cards.

When you’re calculating how much money to pay off with a balance transfer, you should take these balance transfer fees into consideration. That’s because the balance transfer fee will be deducted from your available credit line on your new card, lowering the actual amount of space you can use for the balance transfer itself.

For example, if you have a $15,000 limit on your account and a 3% balance transfer fee, you couldn’t pay off a full $15,000 worth of debt. The fee would add $450 (15,000 x .03 = 450) to the transfer amount, which would put you above your credit limit. So, the most you would be actually able to transfer to your new account would be $14,550 (15,000 - 450 = 14,550). ‬

You may be able to find credit cards that do not have balance transfer fees, but they often don’t offer the 0% intro APR that’s most helpful for reducing your debt.

How much can you transfer?

The amount of money you can move with a balance transfer depends on the terms and conditions set by your bank. You may be able to transfer up to your credit limit (minus any balance transfer fees) or you may be able to use only a certain percentage of your credit line for balance transfers.

For example, say your new card approved you for a credit limit of $2,500, but it also came with a stipulation that you can only use up to $1,500 of that for balance transfers. The one upside to this is that in these scenarios, the balance transfer fee is not typically counted against the amount you can transfer. So, you would likely be able to transfer the full $1,500 and have any associated transfer fee added to your balance on top of that.

Generally speaking, a higher credit score is more likely to result in a higher limit and amount you can use for balance transfers. And it’s a good idea to understand the limitations of your particular balance transfer credit card before you decide how much to transfer. That said, while transferring the full balance of high-interest debt to a 0% intro APR credit card is a great opportunity, even if you can’t transfer the entire balance, moving as much as you can to the new account can still save you money on interest.

What types of debt can you transfer?

For the most part, most other credit card balances can be transferred. Double-check the terms, though. Sometimes a credit card issuer won’t let you transfer a balance from your old card to another card they also issue. For example, if you have a card issued by Chase and then open a new Chase account with a different credit card, you might not be able to move debt from your old balance over. Issuers usually want to bring balances from other creditors — not reduce what they’re making off you.

Some credit cards will allow cardholders to transfer small personal loans and other unsecured debt, like payday loans, but you should read the terms before you move forward. This isn’t always possible.

Additionally, some credit issuers will actually let you transfer student loans, business loans, and even mortgages to your credit card. Check with the issuer to find out what types of debt are eligible.

Credit card issuer	Credit card debt	Auto loan	Personal loan	Student loan	Mortgage
Chase	Yes, so long as it’s not another Chase card	Yes	Yes	Yes	Yes
American Express	Yes, so long as it’s not another AmEx card	No	No	No	No
Capital One	Yes, so long as it’s not another Capital One card	Yes	Yes	Yes	No
Discover	Yes, so long as it’s not another Discover card	Yes	Yes	Yes	Yes
Wells Fargo	Yes, so long as it’s not another Wells Fargo card/line of credit	Yes	Yes	Yes	Yes
HSBC	Yes, so long as it’s not another HSBC card.	Yes, if you are given a promotional check.	Yes, if you are given a promotional check.	Yes, if you are given a promotional check.	Yes, if you are given a promotional check.
Citi	Yes, so long as it’s not another Citi or affiliated card.	Yes, but you would need to contact customer service for help with this after you receive your card.	Yes, but you would need to contact customer service for help with this after you receive your card.	Yes, but you would need to contact customer service for help with this after you receive your card.	Yes, but you would need to contact customer service for help with this after you receive your card.

How long does a balance transfer take?

Balance transfer times vary from bank to bank and can run from 1 to 21 days. In the chart below, we look at some of the timeframes for a few banks that offer balance transfer credit cards.

The reason it’s important to know how long your balance transfer will take is because even though you may have a balance transfer processing, you will still be responsible for making timely payments on your old account until the full amount is paid. If there ends up being an overage, the creditor should issue you a refund for any money paid beyond what was owed. It’s better to overpay and get your money back later than to miss a payment and get a late fee as a result.

Card issuer	Typical length of time for balance to transfer
American Express	5 to 7 days
Chase	Electronic transfers can take 5 to 7 days. Transfers that have to be paid by physical check can take 15 to 21 business days.
Capital One	3 to 14 days, depending on if the transfer can be done electronically.
Discover	7 to 14 days, depending on if you initiate a transfer with a new card
Wells Fargo	With a check, 7 to 14 business days. 1 to 5 business days with electronic transfer to creditor or customer’s checking account
HSBC	7 to 10 business days
Citi	At least 14 days after the account is opened

Does a balance transfer hurt your credit score?

Your credit, as reflected by FICO score or other scoring systems, may initially take a small hit due to adding a hard inquiry to your reports. Hard inquiries occur when you file a credit card application, and the bank requests a copy of your report for evaluation. This is all noted in your report as a “hard inquiry.” These can stay on your report for two years, but the impact is temporary, usually only a few months.

But being approved for a balance transfer card is an overall good thing for your credit score, as it increases the total amount of credit you can access. Remember that when you transfer a balance, you’re not so much getting rid of debt as moving it from one lender to another by using a balance transfer request. Your total debt remains the same, but with a new account, you have more credit you can access.

As long as you don’t put new charges on the account you have freed up with your balance transfer, and you also pay on your new account, your overall debt will go down, and your credit utilization ratio will steadily improve. Credit utilization is the percentage of your available revolving credit that you actually use, and has a heavy impact on your overall credit score.

The key to keeping your credit history in good shape when using balance transfer as a financial tool is to focus on paying down balances and avoiding adding new purchases on the accounts you have paid off.

Compare balance transfer cards

If you want to transfer high-interest debt to a card with an intro APR period, here are a few options worth considering:

Card name	Intro Balance Transfer APR	Balance transfer fee	Credit score needed
Capital One Quicksilver Cash Rewards Credit Card	0% intro APR for 15 months (then 19.99% - 29.99% (Variable))	3% fee on the amounts transferred within the first 15 months (or at a promotional APR that Capital One may offer you at any other time; No fee for amounts transferred at the Transfer APR)	Excellent, Good
Citi Double Cash® Card	0% intro APR for 18 months (then 19.24% - 29.24% (Variable))	3% of each balance transfer ($5 minimum) within 4 months of account opening; then 5% of each transfer ($5 minimum) after the 4 month intro period ends	Excellent, Good, Fair
Citi Simplicity® Card	0% intro APR for 21 months (then 19.24% - 29.99% (Variable))	3% of each balance transfer ($5 minimum) within 4 months of account opening; then 5% of each transfer ($5 minimum) after the 4 month intro period ends	Excellent, Good

Capital One Quicksilver Cash Rewards Credit Card

The Capital One Quicksilver Cash Rewards Credit Card offers a 0% intro APR on balance transfers for 15 months (then 19.99% - 29.99% (Variable)). It also offers a 0% intro APR on purchases for 15 months (then 19.99% - 29.99% (Variable)). The annual fee is $0. This card has several benefits, including extended warranty protection, trip insurance, and zero foreign transaction fees.

Find out more in our Capital One Quicksilver Cash Rewards Credit Card review.

Citi Double Cash^® Card

The Citi Double Cash^® Card is both a balance transfer and cashback card, which is why we like it. It has an introductory 0% APR period of 18 months on balance transfers (then 19.24% - 29.24% (Variable)). The balance transfer fee is 3% of each balance transfer ($5 minimum) within 4 months of account opening; then 5% of each transfer ($5 minimum) after the 4 month intro period ends, the annual fee is $0, and you can earn 2% on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases; plus, for a limited time, earn 5% total cash back on hotel, car rentals and attractions booked on the citi travel℠ portal through 12/31/24.

Check out our Citi Double Cash^® Card review.

Citi Simplicity^® Card

The Citi Simplicity^® Card has an introductory 0% APR for balance transfers for 21 months (then 19.24% - 29.99% (Variable)). It also has a 0% intro APR for purchases for 12 months (then 19.24% - 29.99% (Variable)). The balance transfer fee is 3% of each balance transfer ($5 minimum) within 4 months of account opening; then 5% of each transfer ($5 minimum) after the 4 month intro period ends, and the card offers no late fees or penalty APR for late payments. It also has a $0 annual fee. The Citi Simplicity is a good card if you want more time to pay off your transfers and up to four months to decide which balances you want to pay with your account.

 Check out our Citi Simplicity^® Card review.

Business credit cards that let you do balance transfers

If you have a small business and are looking to save some money with balance transfer cards, you have some options that offer 0% intro APR:

• Wells Fargo Business Platinum Credit Card: Not as robust an option as the others, this card offers a 0% intro APR for 9 months (then 20.74% + prime rate) on balance transfers. But it also offers a welcome bonus that lets you earn $300 or 30,000 points after spending $3,000 in the first 3 months. Learn more in our Wells Fargo Business Platinum Credit Card review.
• U.S. Bank Business Platinum Card: This card can help you pay down large balances as it offers a 0% intro APR for 18 billing cycles on balance transfers, then 17.24% to 26.24% (Variable). There are a few additional benefits to this card, though U.S. Bank does not report business credit activity to the credit bureaus. 
  

FAQs about balance transfers

Balance transfer tips

Now that you’ve learned a bit about how balance transfers work, here are some tips for what to do before, during, and after you open a new balance transfer credit card:

Before you open a new balance transfer credit card

1. Get copies of your credit reports and scores. This will give you a good idea of what a bank will see when they make a hard inquiry.
2. Dispute credit report errors that may be bringing down your scores.
3. Research balance transfer credit cards, offers, terms, and conditions.
4. Make calls and talk to customer service representatives to ensure you understand:
   • How long is the introductory APR
   • What is the balance transfer fee
   • What are the APRs after the introductory period is over
   • What is the credit score you need to have
   • The card's annual fee

During the balance transfer process

1. Collect all of your contact and employment information.
2. Evaluate which accounts you want to pay off with balance transfers.
   • How much is owed?
   • How much are you paying monthly now?
   • How much is the APR?
   • How much can you save by transferring balances?
3. Collect all of the account numbers and balance amounts.
4. Submit the application for your new balance transfer credit card.
5. Once you’re approved, find out how much of a credit limit you are approved for and how much of that can be used for balance transfers.
6. Choose which balances you would like to transfer to the new card.
7. Calculate the balance transfer fee on this amount. Adjust the amount of your intended balance transfer if needed to stay below your credit limit.
8. Submit the accounts and amounts you wish to transfer. This can typically be done by speaking with a customer service representative or through your online account.

After you have executed your balance transfer

1. While the transfers are processing, continue to make timely payments to the account or accounts you’re paying off.
2. Calculate how much you would have to pay per month to pay off the balance on your new balance transfer credit card by the end of the introductory period.
   • If you can’t pay the full amount, budget as much as you can afford. You will still have to make a minimum monthly payment no matter what.
3. Revise your monthly budget to account for this new payment as well as not having to pay on your older accounts anymore.
4. Do not add new charges to the accounts you have paid off.
5. Add a reminder about the end of the introductory period to your calendar.

Bottom line

If you approach your credit card balance transfer with a plan, you should be able to move your debt, tackle it aggressively, and save money while improving your financial situation. If the cards we recommended above don't feel like a good fit for you, be sure to explore all your options in our list of the best balance transfer credit cards.