How to Do a Balance Transfer in 5 Steps

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Are you struggling to pay down high-interest credit card balances? With additional interest accruing every billing period, trying to make a dent in what you owe can feel like shoveling snow in a blizzard. A balance transfer credit card can help you pay down your debts faster by moving them onto a new credit card with a temporary 0% interest rate.

If you're approved for a balance transfer card, the card's issuer will pay off the balance on your old card and move that balance to the new card. By transferring one or more high-interest debts to one balance transfer card, you'll streamline debt repayment and save money in interest. Here's how to do a balance transfer in five simple steps.

Is a Balance Transfer a Good Idea?

A balance transfer card can save you money on interest with an introductory annual percentage rate (APR) as low as 0% for a period of time—typically 12, 15, 18 or 21 months. Whether a balance transfer is a good idea for you depends on the specifics of your situation. Here's what to ask yourself before you apply for a balance transfer card:

  • Will you meet the credit score requirements? You'll typically need a good or excellent credit score to qualify for a balance interest card, so check your score before you plan to apply to determine where your credit stands. It may make sense to work to improve your credit before you apply.
  • What are the card's fees? Balance transfer cards typically come with a fee charged as a percentage of the balance transferred, typically 3% or 5%. Do the math to ensure that you'll save enough on interest to make paying the balance transfer fee worth it.
  • Can you pay off the balance before the 0% interest period ends? Opening a balance transfer card gives you a window in which to pay off your balance without accruing interest. But once the introductory 0% APR period ends, interest will begin to accrue on the remaining balance.
  • Can you avoid racking up more credit card debt? Transferring balances to a new credit card frees up your old credit cards, which can present a lot of temptation to charge purchases to the cards. But that could leave you even deeper in debt.

How to Do a Balance Transfer

Are you ready to use a balance transfer card to streamline your debt repayment process? Here's how to complete a balance transfer in five simple steps.

1. Know How Much You Want to Transfer

The total amount you'll be able to transfer will depend on the credit limit of your new balance transfer card, which you won't find out until you're approved. The card issuer may also set a limit on how much you can transfer, which may be lower than your credit limit. If you have a lot of high-interest debt, you may not be able to transfer all of it to the new card.

Before you apply, make a list of all your debts. For each debt, write down:

  • The amount of the balance
  • The interest rate
  • The type of debt
  • The lender or credit card issuer

Add up the total amount of each balance. If you can't transfer all your debt to your balance transfer card, use this list to prioritize paying off the balances that carry the highest interest rates first.

2. Choose the Right Balance Transfer Card

You usually can't transfer a balance from one card to another card from the same issuer or any of its affiliates. For example, if you want to transfer a balance on your Chase credit card, you'll need to look for a balance transfer card from a different issuer. If you want to transfer a loan balance, be aware not all balance transfer cards allow this; check with the credit card issuer before you apply.

You can boost your odds of success by applying for a balance transfer credit card that you're likely to qualify for. Check your credit report before you apply or consider using Experian CreditMatch™, which can pair you with cards based on your credit profile.

3. Understand the Balance Transfer Terms

Once you've identified some balance transfer cards you might qualify for, compare them based on some key traits:

  • Length of the introductory 0% APR period: The longer the introductory APR period on your balance transfer card lasts, the more time you'll have to pay down your balance. Also note anything that could cause you to lose the 0% intro APR, such as making a late payment, and what your APR would become in this situation.
  • Regular APR: What ongoing APR will the card have after the promotional period ends? The lower, the better if you plan to use the card after your balance transfer is paid off.
  • Balance transfer fee: Balance transfer fees are typically 3% or 5% of the amount transferred, and that fee can add up. If you're transferring a $5,000 balance, for instance, a 3% fee would cost you $150, whereas a 5% fee would cost you $250.

4. Apply for the Card and Initiate the Transfer

Depending on the credit card issuer, you may be able to request a balance transfer when you apply for the credit card, or you might need to wait until you're approved. Either way, you'll be asked for account information for the card from which you want to transfer the balance, and how much you want to transfer. Act fast: In most cases, you'll need to make a balance transfer within the first few months of card ownership to qualify for the introductory 0% APR.

Once the new credit card issuer approves the balance transfer, they'll either contact your creditors and pay off your balances directly or send you a check to do so yourself. The amount you've transferred plus any balance transfer fee will become the balance of your new credit card.

5. Create a Repayment Plan

Once your balance transfer is complete, commit to paying off the transferred balance before the introductory period ends. One good way to erase the debt is to divide your balance by the number of months in your introductory period and pay that amount each month. Treat this payment as non-negotiable, like a car loan, and before you know it, that balance will be gone.

To prevent credit score damage and other penalties—such as losing your promotional interest rate—do not miss a payment on your new credit card. It may help to set up monthly automatic payments so you never have to think about it and never miss a payment.

Balance Transfer FAQs

How Long Does a Balance Transfer Take?

Transferring a balance may take as long as 14 to 21 days, depending on the card issuers involved. To avoid any missed payments or late fees on your old credit cards, keep making at least the minimum payment until you're sure the balance transfer has gone through.

Does a Balance Transfer Hurt Your Credit?

A balance transfer on its own won't directly hurt your credit, but it can have indirect effects on your credit, both positive and negative.

  • How a balance transfer could hurt your credit: When you apply for a balance transfer card, the lender will make a hard inquiry into your credit report. That can cause your credit score to dip temporarily.
  • How a balance transfer could help your credit: Keeping old credit card accounts open and unused after you've transferred their balances could decrease your credit utilization ratio, which can help boost your credit score. Your credit utilization ratio measures how much of your available credit you're using, so adding a new card lowers your overall utilization.

Should You Close Your Old Card After a Balance Transfer?

It's best not to close your old credit card, even if there's a zero balance and you don't plan to use it in the future. Closing an existing card will reduce the amount of credit available to you, which could cause your credit utilization to climb and result in credit score damage. Instead, put the card away somewhere safe so you won't be tempted to use it.

The Bottom Line

Transferring your debts to a balance transfer card can help you chip away at your balance faster and save on interest. To make the most of your balance transfer card, avoid using the new credit card for purchases—accruing a higher balance will make getting out of debt more challenging.

Before you apply for a balance transfer credit card, learn more about your credit to see how your debts are impacting your score. You can check your credit score for free through Experian to see where you stand. When you're ready to search for a balance transfer credit card, Experian CreditMatch™ can match you with recommendations personalized to your score.

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