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What Is a Balance Transfer, and Should I Do One?

A balance transfer lets you move debt from one credit card to a different card with a lower interest rate — preferably 0%.
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Carrying a balance on a high-interest credit card? Consider doing a balance transfer to a new card with a lower rate — possibly even one with 0% for a year or more.

A balance transfer is a simple concept: You apply for a new card with a lower interest rate, then move your balance to it from the old card. In effect, you’re using one card to pay off another, but you’re getting a lower interest rate in the process.

» MORE: 5 times a balance transfer might not be right

How a balance transfer works

You usually can set up a balance transfer by signing in to your online account for the new card or calling the number on the back of that card. You’ll have to provide the account number that you want to transfer the balance from and the amount you want to transfer. Your new card issuer might approve the full amount or only part of your request. The amount of transfer you can get approved for depends on your credit limit, although your issuer may have other rules in place, such as a dollar limit for transfers.

You usually can’t transfer debt between products from the same issuer.

You’ll continue to make payments on your old account until the new card issuer notifies you that the balance transfer has been completed. This could take up to three weeks.

You can move some other types of debt to a balance-transfer card, too. However, you usually can’t transfer debt between products from the same issuer. For example, you can’t transfer debt from one Chase card to another, or from one American Express card to another. See our list of what debts you can transfer to a credit card for details about what the major issuers allow.

» MORE: Which works better for you: Balance transfer or personal loan? 

Choosing the right balance transfer card

When choosing a card for a balance transfer, you’ll want to do your research. Many cards will accept transfers, but the action makes sense only if it saves you money. You’ll want to know:

  • The balance transfer fee: You usually will pay a fee of 3% to 5% of the amount you plan to transfer. For example, if your balance is $5,000, a 3% fee would cost you $150. A few cards have no balance transfer fees.
  • The interest rate on transferred balances: Credit cards that are specifically designed for balance transfers have a lower introductory rate for transfers, and 0% intro periods are common
  • The length of the promotional period: A balance transfer should give you breathing room to pay down your debt, so look for one with a long 0% period. At the end of the promo period, the rate goes up by a lot — usually to the same rate the card charges for purchases, so you’ll want to have your balance paid down by then.
  • The annual fee. A card with no annual fee is best for transfers

A good place to start is with Nerdwallet’s best balance transfer cards. You’ll notice that the best balance transfer deals generally are available only to people with good or excellent credit. As you consider your options, keep these questions in mind:

  • Will the amount you save in interest be higher than the balance transfer fee?
  • Can you pay off the balance you’re transferring during the 0% period?

This simple calculator can give you a sense of how much you could save by moving debt to a balance-transfer card and paying it off, versus leaving it where it is and paying it off over the same amount of time.

» MORE: How to choose a balance transfer credit card

Get a fresh start

Once you’ve transferred your balance, make a plan to pay enough each month to get that debt to zero during the interest-free period — even if it means skimping on your lifestyle for a while.

Don’t just move debt from one card to another. Pay it off.

Paying off your debt should be the point of the balance transfer. You can apply the money you save in interest to your balance to get you out of debt faster. Don’t just move debt from one card to another and then run up your balance again. That’s the debt treadmill, and it’s hard to get off.

What should you do with the old card? Having more open lines of credit on your credit report generally is good for your credit score, so it helps to keep the account open. But if that old card has an annual fee or you just can’t stop spending, you’re better off closing it. Closed accounts in good standing stay on your credit report for 10 years.

Updated Nov. 9, 2017. 

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