Want to consolidate debt but aren’t sure where to start? Here’s how to make a balance transfer, step by step.
Deciding on a balance transfer may be easy. Figuring out how to do it, on the other hand, can be confusing.
Don’t let that scare you away: A balance transfer may be a great option to move high-interest debt to a new card with low or 0% APR. Furthermore, many cards offer attractive choices for benefits and rewards. Read our guide to learn how to compare and choose balance transfer credit cards, how to apply and what to do with your old account after you complete your transfer.
How does a balance transfer work?
Balance transfer credit cards allow you to take balances from one or more credit cards and combine them into one. The amount you can transfer and the rates you receive will depend on the card provider you select.
How many balances can I transfer?
You can transfer the balance of as many cards as you want, up to the credit limit you’re approved for. You also have the option of transferring other types of debt to your balance transfer credit card such as auto loans and mortgages. During the credit card application process you’ll provide the details of your existing debt such as account numbers, creditor name and the amount you wish to transfer.
How many times can I transfer a balance?
If you find yourself at the end of your intro APR period and still have not paid off all of your debt, you may be able to apply for another card. Keep in mind that credit bureaus will begin to notice if you apply for too many cards or can’t pay down your debt during the intro period. Use your balance transfer card as a tool to try to get out of debt for good.
Step-by-step guide to make a balance transfer
If you’ve decided that a balance transfer is best for you, you’ll need to find a card to suit your needs.
Two of the most important things to consider are the promotional APR length and balance transfer fee. Aim for a card that has a long promotional period, at least 15 months, and low or no fees — such as the Chase Slate). Ideally, you should be able to eliminate most, if not all, of your debt during the interest-free period.
If you’re thinking of consolidating your debt through a balance transfer, follow these four steps to compare your options apply and pay down your debt with a 0% APR offer.
Step 1: Compare your options.
Since there are numerous 0% balance transfer offers on the market, it’s important to research and compare them before deciding on the one that will best serve your needs. Compare options based on the following:
- Promotional interest rate. Most balance transfer credit cards come with a 0% balance transfer interest rate, but some may offer a slightly higher — but still relatively low — rate of say 6%. Generally, the lower the interest rate, the more you’ll save.
- Length of the introductory period. Balance transfer card promotions usually offer a low or 0% APR for a fixed time only. This introductory period usually lasts between 6 and 24 months. Naturally, the longer the period, the greater your possible savings.
- Revert rate. When the promotional period ends, a revert interest rate will apply to your balance. This is usually a higher interest rate, such as the standard purchase and cash advance rate, so factor it into your calculations. It’s especially important if you can’t repay your entire debt during the introductory period.
- Balance transfer limit. There’s a limit to the amount you can transfer, and this varies among different cards. Usually, you can transfer only up to a percentage of your approved credit limit — for example, 70% or 95%.
- Eligible issuers and cards. Typically, you can’t make balance transfers between cards issued by the same bank or card issuer.
- Balance transfer fee. You may be charged a one-time fee for the balance transfer, typically up to 3% of the transferred amount. As this can be a substantial fee depending on the size of your debt, you may want a card with no balance transfer fee. Otherwise, this fee could offset your interest savings.
- Rewards. Check if your card comes with any rewards or benefits such as interest-free days, travel rewards or 0% APR on purchases.
- Other card features and fees. It’s often best not to use a balance transfer card for purchases, as your primary goal is probably to pay down your debt. If you plan to use the card beyond the balance transfer offer, however, consider its features. These include the annual fee, purchase interest rate, cash advance interest rate, cash advance fee, foreign transaction fee and other fees.
- Credit rating. Your credit rating will play a huge part in which balance transfer credit cards you’ll qualify for. If you have fair or poor credit, research cards with more lenient approval criteria.
Step 2: Apply for a credit card and request a balance transfer.
Now that you’ve chosen the perfect card, it’s time to submit your application. When filling out your application — online or through the mail — you can include balance transfers you wish to make. You’ll need to provide the account number and the amount you wish to transfer.
This is simply a request on your part. The exact amount you can transfer will be determined once your application has been approved.
If you’re approved, your new card provider will transfer the balances on your behalf, up to the stated limit minus transfer or annual fees. Continue to make the minimum monthly payment on your old card until you have confirmed the transfer’s completion.
If you submitted your application without making any balance transfer requests, you can request transfers after approval. Do this in one of two ways:
- By phone: Once you receive your card in the mail, call the number on the back of the card. A representative will help you complete your transfer.
- Online: Sign up for online banking after you receive your card. Once you’ve created your online account, follow the instructions to complete the transfer.
Try to complete the transfer as soon as possible. If you wait longer than 60 days, you may lose your promotional APR.
It typically takes five to seven business days to be approved. If you haven’t heard back after this time, contact the bank to find out if there’s an issue. You may be asked to provide additional information.
Step 3: Consider closing old cards.
Once you’ve received your new credit card and your balance transfer has been processed, you may want to close your old card account. Verify with your old bank that the transfer is complete.
If your old card has an annual fee, you can close it and avoid further charges. If it doesn’t, you don’t necessarily have to close the account. Having open lines of credit that you aren’t using can improve your credit rating.
Step 4: Start paying off your debt.
Once your balance transfer is complete, note how long your promotional APR lasts. If you have a balance after the APR expires, it will start accruing interest at the revert rate. Try to make more than the minimum payment each month to repay the entire debt before that time. If necessary, seek free help for managing your debt.
A balance transfer may buy you some interest-free time to repay your balance, and ultimately save you money. With some discipline and commitment, you can be debt-free faster than you thought.
Transferring your balance after you apply for and receive your card
Your balance transfer promotion won’t last forever. However, you’ll have time to qualify for your promotional interest rate. Check with your provider if you’re unsure of its rules.
Card providers that offer the promotional balance transfer after application
American Express lets you transfer a balance at the promotional interest rate up to 60 days after you’re approved for the card.
Bank of America lets you transfer a balance at the promotional interest rate up to 60 days after you’re approved for the card.
Capital One doesn’t specify cutoff dates, but double check with a bank representative to be sure.
Chase doesn’t specify cutoff dates, but double check with a bank representative to be sure.
Citi lets you transfer a balance at the promotional interest rate up to four months after you’re approved for the card.
Discover will periodically change the cutoff date by which customers have to transfer balances to receive promotional APRs. Typically, this will be 60 to 90 days after you apply for your card.
Costs and benefits of balance transfers
What you get out of a balance transfer card largely depends on your ability and willingness to make a plan and stick with it. Part of organizing that plan should be comparing the features of a balance transfer card with what you’re seeking to get out of it.
What you might save
When you apply for a new card, you may be offered an introductory rate that is low or even 0% interest for a temporary period of time. The intro period you’re offered is dependent upon your credit score and it usually lasts for a temporary period, such as 6, 12, 18 or 21 months.
How much does it cost?
Most cards will charge a fee to transfer your debts, usually between 3 and 5% of the debt amount, so make sure to compare this to how much you’ll save on interest during the promotional APR period.
Calculate your balance transfer fee
Can I transfer someone else’s balance to my card and vice versa?
One topic that’s often inquired about is whether or not you can transfer a balance from someone else’s card to yours. Many people would love the opportunity the help their loved ones through financial hardships. While this can definitely be done, there are a few things you should consider before making this move.
- Make sure you have a substantial enough credit limit. Will you be able to cover the existing debt you carry, their balance and still keep your utilization ratio under 30 percent?
- As the primary cardholder, you’ll be responsible for making interest payments when the promotional APR period ends. That’s why it’s important to verify that the debt can be repaid during the intro 0% APR period.
- Be positive that you can trust the person you’re transferring a balance for. They should be able to demonstrate the ability to pay you back on time. If they miss a payment or you default on the card, it will be your credit rating that is affected, not theirs.
On this same note, if you know someone with a low or 0% APR card who is willing to help you consolidate your debt, you could transfer your balance to their card.
Making a balance transfer can seem incredibly complicated, but it can be much simpler if you take it step by step. If you’re ever unsure about any part of the process, just give a call to your card provider.
After you’ve made your balance transfer, keep track of which of your old cards you still need to make payments on. Then note details about your balance transfer, such as the time you have to make other transfers and how long your promotional interest rate lasts.