Tackling high-interest credit card balances may feel like an uphill battle. As interest piles up, keeping up with payments can become more difficult, and the amount you owe can grow by the day. Juggling balances across several cards may be even more difficult to manage. A credit card balance transfer is one strategy for achieving some relief. This approach involves moving your existing debt to a new credit card that offers a lower interest rate, potentially saving you money and simplifying your payments. We’ll discuss the ins and outs of credit card balance transfers below and guide you through selecting the best credit card for your balance transfer needs.
What is a Balance Transfer Credit Card?
Last Updated: August 27, 2024
11 min read
Table of contents
Key points about: balance transfer credit cards
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The best credit card for a balance transfer may come with a low introductory APR.
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Transferring your credit card balance can help you pay off debt faster.
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Some balance transfer credit card offers may come with no annual fee or a cash back rewards program.
What is a balance transfer?
A balance transfer allows you to shift outstanding debts, including credit card balances and loans, from one account to another. If you have multiple debts with different annual percentage rates (APRs), you might use a balance transfer to consolidate them so they’re easier to manage. Likewise, if you have a balance accumulating interest at a high rate, transferring it to an account with lower interest could help you manage your debt.
What is a credit card balance transfer?
As you may have guessed, a credit card balance transfer is when you move debt with a high interest rate to a credit card with a lower APR. With a lower interest rate, your balance won’t grow as quickly, which ideally buys you the time you need to repay it and save money.
Suppose you have a high balance on a store credit card that has a 21% APR. In that case, you may be able to transfer that debt to a credit card with a lower introductory rate, saving money on interest if you pay off the balance by the end of the balance transfer introductory period.
How credit card balance transfers work
The process for transferring a credit card balance may vary depending on your credit card issuer and unique situation. In most cases, however, balance transfer credit card offers work by allowing you to take advantage of an introductory promotion on a new card.
Some credit cards come with a low introductory APR for a limited time period. During that timeframe, the new card may charge a much lower interest rate than the card from which you transfer your balance. In fact, some charge no interest.
Ideally, you want to take advantage of this zero- or low-APR period and completely pay off your credit card balance because a higher portion of your payments can go toward the principal balance instead of paying the interest you’ve accrued. If you can’t totally pay it off, try to pay as much of your balance as you can during the introductory period. Once the intro period ends, your new balance transfer card’s standard interest rate kicks in for new purchases and your remaining balance. This is one reason you may want to avoid adding new purchases to your balance transfer card until you’ve got the balance down to zero. New purchases could make it more difficult to pay off the card before the intro period ends.
Remember that a balance transfer may come with a fee, typically based on the amount you transfer. That fee increases your balance. If you transfer $3,000 with a 3% balance transfer fee, your new starting balance would be $3,090.
You can ask your new credit card issuer to pay your previous creditor on your behalf, which adds the balance from your previous creditor to your new balance transfer card. If you have any payments due on your old account, you’ll want to pay by the due date to avoid late fees if the transfer doesn’t go through in time.
Credit card issuers typically don’t offer a grace period for balance transfers. That means your balance will likely begin accruing interest right away unless your new card has a 0% introductory APR.
Benefits of credit card balance transfers
While credit card balance transfers aren’t the only way to manage credit card debt, they do offer some unique advantages:
- Lower credit utilization ratio. When you open a credit card account, your new credit limit increases your overall available credit. This could decrease your credit utilization rate before you even begin to lower your outstanding balance.
- Faster repayment. A lower interest rate means more of your payments can go toward your principal balance. That way, you can reduce your debt in less time.
- Potential rewards. You could get additional value out of your credit card balance transfer by choosing a card with rewards. While you may not want to use your card for additional purchases until you repay your initial balance, you could earn cash back on future eligible transactions.
- Avoiding late fees. If you're struggling to make minimum payments on your current card balance, you might incur some late fees. Transferring the balance to a card with lower payments could make it easier to pay on time.
- Financial breathing room. A balance transfer could lower your monthly payments, leaving you with more to spend to lower your overall credit card debt or to use on other necessities.
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What to consider before applying for a credit card balance transfer
A credit card balance transfer may offer a convenient way to manage your outstanding credit card debts. However, you should keep a few factors in mind before you apply for a balance transfer:
- How much you want to transfer. You can only transfer up to the credit limit on your new card. If you can’t transfer all your outstanding credit card debt, consider how much you would have to move in order to make your balances more manageable.
- Your current card's APR. Keep your current card’s APR in mind to compare with potential balance transfer offers. How low would the APR have to be for you to pay down your debt consistently? A balance transfer may not be the best fit if your current card already has a low APR.
- Your new card's introductory APR. Credit card balance transfer offers typically include a lower APR for a set period after you open your account. Your rate may vary depending on your credit card issuer and your qualifications, like your credit score.
- Your new card's regular APR. While, ideally, you’d repay your balance within the introductory APR period, it’s still important to know your new card’s standard interest rate and interest rates for specific types of transactions, like a cash advance. Also keep in mind if the new card begins accruing interest immediately for any new purchases.
- The balance transfer fee. Credit card issuers typically charge a fee for balance transfers. The fee is usually a small percentage of the amount you’re transferring. Make sure you weigh the cost of balance transfer fees against the amount you’ll save in interest before deciding.
- Length of the promotional balance transfer period. After the promotional period, your balance will begin accumulating interest at the standard rate, so it’s important to note that timeframe. As you’re choosing a card for your balance transfer, you may want to prioritize cards with longer introductory periods so you have time to repay your balance.
- How much you'll have to pay each month. You'll likely have to pay more than the monthly minimum payment to pay off your full balance within a credit card’s balance transfer introductory period. You might choose to pay the same amount each month or adjust payments based on changes to your income and spending.
How to choose the right balance transfer offer
When you’re choosing a balance transfer credit card offer, consider the qualities you’d look for in any credit card. That way, you can keep benefiting from your card even after you repay your balance. While finding a card with a lower interest rate is important, you should also consider your other credit priorities. For example, if you want to earn rewards as you use your card, you can transfer your balance to a cash back credit card. Access to perks like security features that keep your information safe may also influence your decision.
Consider your budget and how you’d like to use the card in the future. For example, if you want to use your credit card for everyday purchases, you may want one with rewards at grocery stores and gas stations.
Why choose Discover® for balance transfer offers
If you're looking for a balance transfer credit card offer, the Discover it® Cash Back Card may be a good fit. You may receive a low APR balance transfer offer, making it easy to pay off your existing debts. With Discover, you don’t have to pay an annual fee. That way, you can keep more in your pocket as you pay down your balance.
After you repay your debt, you can also enjoy rewards on all eligible purchases. Earn 2% Cashback Bonus® at gas stations and restaurants on up to $1,000 in combined purchases each quarter, automatically. Plus earn unlimited 1% cash back on all other purchases.2
Did you know?
Every Discover Card lets you earn rewards on every eligible purchase without an annual fee. Choose the card that earns the type of rewards that are most valuable to you.
How to transfer a balance to your Discover Card
You may qualify for a balance transfer introductory offer with a low APR if you're new to Discover. Then, you can transfer your balances from other cards to your Discover Card, up to your credit limit.
If you’re already a Discover® Cardmember and you want to consolidate credit card debts, you can check your online account portal to see if you have a credit card balance transfer offer available. 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.
Tips for getting the most out of credit card balance transfers
Credit card balance transfers have the potential to help you repay your debts and improve your financial well-being. However, the benefit you receive from them depends on your habits and behaviors. To make the most of your balance transfer, consider the following tips:
For a balance transfer credit card offer to have a lasting impact, it’s important to keep your spending under control. If you continue accumulating debt during your low-interest introductory period, you might end up with unmanageable credit card bills again.
If you qualify for a balance transfer offer, seize the opportunity to pay off as much debt as possible before the promotional period expires. That might mean making the highest payments you can afford until you’ve paid down your balance.
Remember that transferring your balance doesn’t close the original card, and you may want to keep your card open. Closing old accounts means losing some of your available credit, which can impact your credit score by changing your credit utilization ratio. You may also affect your score by shortening the average age of your accounts.
If you keep your old card open, avoid racking up debt just because you have the available credit. Doing so can erase any headway you may have made with the transferred balance in the first place.
It’s important to be disciplined about making payments to the new card on time every month. Late payments can wreak havoc on your credit score, trigger a late fee, or even increase your interest rate. The new APR could be much higher than the promotional rate you started out with.
With some discipline and research, you can use a balance transfer credit card offer to regain control over your debt. To find the best card for your situation, consider interest rates, the new card’s promotional period, and potential fees. Practice healthy credit habits to reduce your balance—pay more than the monthly minimum whenever possible, pay on time, and avoid increasing your credit utilization. After you’ve repaid your balance, you can enjoy your new card’s perks and rewards.
Balance transfer FAQs
Each credit card issuer has its own requirements for balance transfer credit card offers. As with other credit cards, you’re more likely to qualify for the most competitive options if you have a good credit score. However, you don’t necessarily need excellent credit to qualify for a credit card balance transfer.
Balance transfers don’t automatically close an account. If you want to close a credit card account after a balance transfer, contact the credit issuer on the original account. However, you may want to keep the card open, as closing cards may increase your credit utilization ratio, which may impact your credit score.
Balance transfers can positively or negatively impact your credit score depending on your unique circumstances. Credit card issuers typically have to perform a hard credit inquiry to see if you’re approved for a balance transfer credit card offer, which could hurt your credit in the short term. However, with responsible use, a credit card balance transfer could improve your credit utilization ratio and help you make monthly payments on time, which are both important factors to positively impact your credit score.
The amount you can transfer depends on the new card’s credit limit and the issuer’s policy. There may be debts from specific account types that you can’t transfer to your new card, and the issuer may limit how much you can transfer based on the credit limit you’re approved for.
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There is no hard inquiry to your credit report to check if you’re pre-approved. If you’re pre-approved, and you move forward with submitting an application for the credit card, it will result in a hard inquiry which may impact your credit score. Receiving a pre-approval offer does not guarantee approval. Applicants applying without a social security number are not eligible to receive pre-approval offers. Card applicants cannot be pre-approved for the NHL Discover Card.
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You earn a full 2% Cashback Bonus® on your first $1000 in combined purchases at Gas Stations (stand-alone), and Restaurants each calendar quarter. Calendar quarters begin January 1, April 1, July 1, and October 1. Purchases at Gas Stations and Restaurants over the quarterly cap, and all other purchases, earn 1% cash back. Gas Station purchases include those made at merchants classified as places that sell automotive gasoline that can be bought at the pump or inside the station, and some public electric vehicle charging stations. Gas Stations affiliated with supermarkets, supercenters, and wholesale clubs may not be eligible. Restaurant purchases include those made at merchants classified as full-service restaurants, cafes, cafeterias, fast-food locations, and restaurant delivery services. Purchases must be made with merchants in the U.S. To qualify for 2%, the purchase transaction date must be before or on the last day of the offer or promotion. For online purchases, the transaction date from the merchant may be the date when the item ships. Rewards are added to your account within two billing periods. Even if a purchase appears to fit in a 2% category, the merchant may not have a merchant category code (MCC) in that category. Merchants and payment processors are assigned an MCC based on their typical products and services. Discover Card does not assign MCCs to merchants. Certain third-party payment accounts and digital wallet transactions may not earn 2% if the technology does not provide sufficient transaction details or a qualifying MCC. Learn more at Discover.com/digitalwallets. See Cashback Bonus Program Terms and Conditions for more information.
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