What Is A Credit Card Balance Transfer?

If you're carrying credit card debt, a credit card balance transfer could help you save money and pay what you owe faster. Transferring existing debt from a credit card with a high rate to a card with a lower rate allows you to reduce interest and monthly payments, so that you can pay off your balances sooner.

Let’s break down what a credit card balance transfer is, how it works, and when it might make sense for you.

What Is A Credit Card Balance Transfer?

A credit card balance transfer lets you move existing debt from one credit card to another, often to a card with a lower interest rate or even a 0% introductory rate. This strategy can reduce your interest charges and help you get a handle on your finances. With lower interest, more of your payment goes toward the original amount of money you borrowed (the principal balance).

You can save hundreds of dollars in interest (or even more, depending on the amount you owe) by taking advantage of the low or 0% period and utilizing an aggressive debt paydown strategy during this time.

What Are The Benefits Of A Balance Transfer?

• Lower Interest Rates: Save money over time by paying less in interest charges
• Consolidate Debt: Combine multiple debts into one monthly payment to simplify your finances
• Pay Down Debt Faster: With lower interest and less payments, you can build momentum and pay off balances more quickly
• Boost Credit Score: Reducing your credit card balances can improve your credit usage ratio (Tip: Aim to use less than 30% of your available credit — if you really want to be an overachiever, aim for 10%)

How To Choose The Best Balance Transfer Credit Card

When searching for a balance transfer credit card, it's important to evaluate several key features to ensure you're making a smart financial move. Start by looking for 0% balance transfer credit cards that offer an introductory APR period of at least 12 to 18 months — this gives you a fair amount of time to pay off your transferred balance before you start accruing interest.

Be mindful of balance transfer fees, and check if there are any transfer limits that might affect your ability to consolidate debt. Comparing offers side by side can help you identify cards with the most favorable terms, such as low ongoing APRs, minimal fees, and flexible repayment options.

Most top-tier balance transfer cards require a good or excellent credit score, so it helps to know your score before applying to increase your chances of approval.

Tips For A Successful Balance Transfer

Effective balance transfer strategies can help you save money and pay down debt more efficiently, but success depends on following a few key guidelines. Here are the dos and don’ts of a successful balance transfer:

Dos

• Do check your credit score beforehand to ensure you meet the card issuer's requirements for approval
• Do compare offers and look for cards with the longest 0% APR periods and lowest fees
• Do initiate the transfer and start the process early to maximize the interest-free period
• Do read the fine print and make sure you understand the terms, fees, and potential penalties
• Do create a repayment plan and set a clear strategy to pay off the balance before the intro period ends (Tip: Start by dividing your balance by the number of interest-free months to determine monthly payment goal)
• Do continue payments on the old card(s) to avoid fees or penalties until the transfer is complete
• Do monitor progress by regularly tracking your payments and remaining balance

Don’ts

• Don’t make new purchases on the balance transfer card or the old card(s) you transferred debt from
• Don’t ignore transfer fees, especially when transferring a large amount of debt
• Don’t miss payments — late payments can result in losing the 0% APR and incurring penalties
• Don’t assume immediate processing, as transfers can take several days to process; continue payments on the old card(s) until confirmed
• Don’t close old accounts immediately, as closing them can lower your credit age and negatively impact your credit score (Tip: If you need to reduce the temptation to make purchases, consider freezing your account or cutting up the old cards)

The Bottom Line

When done right, a credit card balance transfer can be a game-changer for your financial health. Use our Credit Card Balance Transfer Calculator to see how much you could save by transferring high-rate credit card balances from other qualifying financial institutions to a new BCU credit card with 0% introductory APR!

Ready to experience the credit union difference? Become a member of BCU!

Join Today

About BCU: BCU is a not-for-profit, member-owned credit union that is fiercely dedicated to Empowering People To Discover Financial Freedom. With over $6B in assets, BCU is committed to providing a fast, easy, and secure banking experience along with extraordinary service to more than 360,000 members. The BCU field of membership includes employees and their families from Fortune 100 companies across the US and Puerto Rico. Membership is also open to individuals who live or work in Northern Illinois, Southern Wisconsin, and Puerto Rico, as well as subscribers of BCU’s wholly owned Credit Union Service Organization (CUSO), Life. Money. You.^®. All BCU members enjoy lifetime access to financial services and well-being programs that inspire confidence through the brand promise “Here Today For Your Tomorrow.”

To learn more about how we can help you realize your financial dreams, visit BCU.org. For media inquiries, visit BCU.org/About-Us/Media-Relations.