A man on a tablet compares different balance transfer credit card offers.

How Does a Credit Card Balance Transfer Work?

Last Updated: August 6, 2024

7 min read

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Key points about: credit card balance transfers

A balance transfer is when you move the outstanding balance of one credit card with a high interest rate to another credit card that gives you a lower interest rate.
Balance transfers may help you save money on interest and potentially pay off your debt faster.
You can request a balance transfer from your current credit card company or compare offers from other card issuers.

A balance transfer is one option you may have if you want to consolidate debt from multiple creditors, or simply move high interest credit card debt from one card to a new card with a low introductory interest rate. Let’s explore how balance transfers work and what to consider when transferring a balance so you can determine if it’s the right solution for you.

How does a balance transfer work?

A balance transfer is when you move debt from one credit card (or other high-interest bill) to another credit card. Ideally, balance transfers may save you money on interest. By moving debt from a credit card with a high interest rate to a credit card with a lower interest rate, more of your monthly payments can go to pay off your debt rather than the interest you’re accruing. If you plan correctly, you could potentially save money on interest by moving debt to a credit card with a lower annual percentage rate (APR) or a 0% intro APR.

But keep in mind, as the Consumer Financial Protection Bureau notes, there’s sometimes a fee to do a balance transfer, which is usually a certain percentage of the transferred amount or a fixed amount depending on the card issuer.

Discover has a number of low intro APR balance transfer credit card offers and no Annual Fee on any card. Learn about each card’s features to find the best credit card offer for you.

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Balance transfers can be a great tool for debt consolidation and debt management if used correctly. With a low or 0% introductory rate, you may pay off debt quicker without worrying about accruing much interest, if any at all.

What to consider when making a balance transfer

There are many balance transfer credit card offers available with different requirements. Choosing the right one for you would depend on where you are financially and your long-term goals. Compare balance transfer credit card offers to figure out which cards you’re eligible for and how much you may save on interest.

How much you save will depend on several factors, like how long the no- or low-interest period lasts, any balance transfer fee you’ll pay, and the regular interest rate that’ll kick in after the intro APR expires.

Review your financial situation

Before considering a balance transfer, look at your finances. If you have a good credit score and a manageable credit card balance, moving your high interest debt to a low interest card may make paying it off easier. However, if you struggle to pay your credit cards, have maxed-out cards, or have past-due payments, you may want to consider other debt consolidation options. There’s limited time to pay off your balance under the lower intro rate; there’s typically a balance transfer fee; and you’ll pay regular interest on your new card if you can’t pay everything off in time.

Decide how much you should transfer

Before you begin the process of moving your balance, be sure that you know ahead of time how much of your outstanding debt you’re allowed to transfer to other cards. Usually, your credit card company will set the amount you can transfer. If you can’t transfer the full balance, consider that you’ll need to continue paying your original credit card account, as well as the new credit card.

Your credit card provider may let you transfer the full balance, but you don’t have to transfer everything. To figure out the amount that you want to transfer, think about how much you can realistically pay each month toward the debt. Then multiply your monthly payment by the number of months you’ll have a low or 0% APR.

Consider balance transfer fees

Typically, the credit card issuer you're transferring your balance to will charge a balance transfer fee. Transfer fees are usually 3-5% of the amount that you transfer, with a $5 to $10 fee minimum. The amount you end up paying in fees depends on the credit card company and their current offers.

Think about how much you’ll actually save

Calculate how much you’ll pay in fees vs. how much you’ll save on interest. Make sure you keep in mind the intro period and how long it’ll take you to pay off the balance.

A balance transfer may not be the right option for you if you pay more in fees than you’ll end up saving on interest, or if you just save a few dollars. Also, think about whether you’ll continue to use your credit card for purchases while you’re making payments. Your card usage will impact how much you can save, and how long it’ll take you to pay the balance off.

Know that the introductory rate won't last forever

Your introductory low or 0% APR has a limited timeframe. After the promotional period ends, any balance you have left on your new credit card could start to accrue interest at the standard purchase APR.

Because the low interest rate is temporary, to get the most out of your balance transfer, you should have a payment plan in place. Plan so that you can pay off your transferred balance before the introductory, or promotional period ends. Stick to your payment schedule so you don’t end up paying the standard rate when the introductory period is over.

Consider the impact to your credit score

If you’re thinking about a balance transfer offer, consider the implications it may have to your credit. For starters, people with a good credit score typically get offered better interest rates on balance transfers. You can review your credit report at AnnualCreditReport.com to check your credit history.

Also consider the effects a new balance transfer card may have on your credit score. As Equifax points out, there are pros and cons to a new balance transfer credit card. The positive impact could be raising your credit utilization ratio and lowering your overall debt when using the card responsibly. However, when you first apply for the balance transfer card, it’ll trigger a hard inquiry, which may temporarily lower your credit score.

How to complete a credit card balance transfer

Start the balance transfer process by checking to see if your current credit card company offers it first. If your current credit card company doesn’t offer transfers, consider applying for a balance transfer offer specifically for that purpose.

Once you’re approved for a new card with a balance transfer offer, you can request one over the phone or online with your credit card issuer. Some information you’ll need includes the account number for the old card and the amount you want to transfer.

Keep an eye out while your balance transfer processes, and your old credit card company receives payment. It may take some time for a balance transfer to process. In the meantime, you should continue to make payments with your existing credit card until the balance transfer is complete.

Did you know?

With Discover, an account must be open for 14 days before Discover can begin processing your balance transfer request. After that, most transfers are processed within 4 days.

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Having a balance transfer credit card can help you consolidate and manage your credit card debt and may help you save on interest charges. With good personal finance habits and a bit of planning, you can get the most benefit from your balance transfer card.

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