How To Do A Credit Card Balance Transfer

A balance transfer can be a smart way to tackle high-interest credit card debt. Many balance transfer credit cards offer 0 percent intro APR periods — sometimes up to 21 months — giving you time to pay down balances without interest. With the right offer, you can save money and pay off debt faster. Here’s how to do a balance transfer in five simple steps.

1. Do your research

Like many things involving your personal finances, balance transfers have pros and cons worth considering. Take the necessary time for research and reflection before applying for a new card.

Confirm a balance transfer is the right choice for you

Before you begin, carefully review your financial situation to see if you’re in a good position to do a balance transfer. Three key factors can help determine if that’s the case:

• Your debt: A balance transfer card is most useful if you have high-interest debt and need extra time to pay it off. Calculate how much you can put toward your debt each month —Bankrate’s credit card payoff calculator can help.
• Credit card fees: In most cases, you’ll pay a balance transfer fee, so be strategic. Transfer enough to save meaningfully on interest, but not more than needed. Also, factor in any annual fees that could reduce your overall savings.
• Your credit score: You’ll have the best shot at qualifying for a top balance transfer card with a good credit score (FICO score of 670 or higher). If your score is lower, you might still qualify, but with a shorter intro APR period, making it harder to pay off your balance before interest kicks in.

Compare individual card offers

To know which balance transfer card is right for you, compare your top three card offers to find the best one. Here are a few things to look for when comparing balance transfer cards:

• Length of the intro APR offer: Many balance transfer cards offer 0 percent interest for a year or more, helping you avoid interest while paying down debt. The longer the intro period, the more you save, but be sure to check the regular APR, which kicks in once the intro APR offer ends.
• Benefits: When you’re transferring a balance, the focus shouldn’t be on earning rewards. However, the other cardholder benefits like credit monitoring, phone protection or no-penalty APR could add value to your introductory offer.
• Balance transfer fee: Most balance transfer cards charge a 3 to 5 percent fee, so transferring a $5,000 balance could cost $150 to $250 in fees. Some cards offer no-fee transfers, but these often come with shorter intro APR periods. Use Bankrate’s balance transfer calculator to see if paying the fee is worth it for your situation.

Take note of the fine print

For one, be sure to consider your potential credit limit. You can’t transfer a balance higher than your credit limit, and $10,000 is at the high end for most consumers (remember that any applicable balance transfer fees will also be deducted from your credit limit.)

Also, be aware of the types of debt you can transfer. Most balance transfers involve moving debt from one or more credit cards to a new card. Though it’s less common, some issuers also allow you to transfer other types of debt, including car loans and student loans. Review the card’s terms and conditions before applying to make sure it can accommodate the kind of debt you’re looking to transfer.

Finally, take the card’s variable APR into consideration before you apply. If you fail to pay off your balance within the allotted introductory window, the variable APR will kick in for your remaining balance.

2. Apply for a balance transfer card

You can apply for a balance transfer card online in a matter of minutes. To apply, you’ll need to provide basic personal and financial data, such as your name, address, Social Security Number and income. You’ll also want to make sure you have details for the credit cards you’re looking to transfer balances from on hand.

With some cards, you can begin the process of transferring balances as part of your application. In this case, the balance transfer credit card application will ask you for the credit card account number and balances you’re planning to transfer to your new card.

After you apply for your new balance transfer card, you’ll often find out if you’ve been approved right away. If you aren’t notified of your approval of your application, you may need to wait for an email from the credit card company. Learning that your card application is “pending” or “under review” can be nerve-wracking, but be patient — in most cases, you’ll hear back from your credit issuer within a few days.

In the event the issuer denies your application, look for a letter in the mail explaining the reasons for the denial.

3. Transfer the balance to the new credit card

While each credit card issuer’s balance transfer process is slightly different, it’s usually a simple process you can likely complete in a few ways:

• Online at the time of application: Sometimes, the card application will ask you whether you have a balance to transfer. You can initiate the process at that point.
• Call customer service: You can call a customer service representative to initiate the transfer.
• Through your online account or mobile app: Log in to your account and request the balance transfer through the issuer’s portal.
• Using a balance transfer convenience check: Some issuers offer balance transfer checks you can use to complete a balance transfer. Be sure to check that you’re using a balance transfer check and not a cash advance check if you go this route.

In any case, you’ll need to provide basic information about the credit cards you plan to transfer the balances from, including the card numbers and the amounts you’d like to transfer to your new card.

4. Wait for the transfer to go through

Balance transfers take time, and you may need to wait a few days to a few weeks for your transfer to complete. It’s important to keep making payments on your old cards until your balances have been fully moved over to your new 0 percent introductory APR credit card. If you don’t, you risk running up new interest charges and fees on your old cards for missed payments.

After your balance transfer is complete, follow up with your old credit card issuers to make sure those accounts show a $0 balance. Only after you confirm the $0 balance should you stop making payments (although you may not want to close the account).

5. Pay off your balance

Once your balance transfer is complete, you should be able to see the transferred amount on the new card. To pay your debt off faster, prioritize making payments on the balance transfer credit card.

Put the 0 percent APR introductory offer to good use by paying down your debt while you aren’t accruing interest. And try to avoid adding new charges to the card.

The more money you can put toward your balance each month after your transfer is completed, the faster you’ll get out of debt. Each dollar you pay during your 0 percent APR period has a bigger impact since 100 percent of it goes toward the balance you owe and not toward interest payments.

Take a look at your monthly budget and identify any areas where you can reduce spending, at least temporarily. Controlling your spending will enable you to get a handle on your current debt, all while developing healthy money habits to help you avoid getting into debt again in the future.

The bottom line

The best balance transfer credit cards can help you consolidate and pay down high-interest debt while saving on interest, especially if your credit score is above 670 and you can pay off the balance during the 0 percent intro APR period. Staying on track with at least the minimum payment each month, ideally more, is key to taking full advantage of the interest-free window.

Frequently asked questions about how to do a balance transfer

• Is a balance transfer the right choice for me?
  

  If you have high-interest debt and need more time to pay it off, a balance transfer credit card will benefit you. Other reasons a balance transfer credit card may be right for you include if you have a good credit score and if the amount you transfer is worth it compared to the credit card fees.

• How long does it take for a transfer to go through?
  

  Transfers can take anywhere from a few days to a few weeks to be completed.

• How do I pay off the balance with 0 percent APR?
  

  The more money you can put toward your balance each month after your transfer is completed, the faster you’ll get out of debt. Make sure you pay off the balance entirely before the introductory period ends to ensure you avoid incurring any interest.