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A balance transfer involves transferring one credit card’s debt to another, where the card that you’re transferring from has a higher interest rate. A number of credit cards come with introductory balance transfer offers and allow you to pay no interest on transferred balances for a predetermined period.

When looking for a balance transfer card, it’s best to check the length of the introductory period, the balance transfer fee and the interest rate that kicks in after the end of the promotional period. While carrying out balance transfers multiple times is possible, doing so requires meticulous management of your finances.

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MoneyGeek's Takeaways

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A balance transfer gives the cardholder the ability to save on interest charges.

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Most introductory 0% APR offers on balance transfers range from 6 to 21 months.

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Violating cardholder agreement terms may lead to the nullification of a balance transfer offer.

What Is the Purpose of a Balance Transfer?

The aim of transferring credit card balances is to save money on interest charges. People typically do this by transferring outstanding debt from credit cards with high annual percentage rates (APRs) to cards with 0% APR offers. Depending on the card you get, you might get to pay no interest charges on transferred balances for up to 21 months. The money you save can help you bring down your debt sooner.

You typically need to pay a 3% to 5% fee of a transferred balance, with a minimum fee of $5 to $10. However, this is still considerably lower than the APR that credit cards charge otherwise.

The U.S. Bank Visa® Platinum Card comes with a 0% APR offer on balance transfers for 20 billing cycles. It charges a balance transfer fee of 3% of the amount of each transfer or $5, the higher of the two. The Citi® Diamond Preferred® Card, on the other hand, comes with a 0% intro APR on balance transfers for 21 months. It charges 5% of the transfer amount or $5, the higher of the two.

One possible challenge with credit card balance transfers is that you need to keep making your payments on time each month. If you miss making even a single payment, your card provider could terminate the 0% APR offer, and a potentially high penalty APR may apply on outstanding balances from purchases linked to the card. While a balance transfer may lead to savings, going through its fine print in advance is crucial.

What Is the Best Way to Do a Balance Transfer?

The best way to begin carrying out a balance transfer is by looking for a suitable balance transfer card. Intro 0% APR offers on balance transfers extend up to 21 months with some cards, but you typically need good to excellent credit to qualify for the best offers. In addition, you cannot transfer balances between cards issued by the same bank. For example, you cannot use a U.S. Bank credit card’s 0% APR offer to transfer an existing balance from another U.S. Bank card.

Once you’ve been approved for a balance transfer card, you need to initiate your balance transfer. To do this, you typically need to provide details of the card from which you want to transfer the balance. The information you need to provide includes the card’s name, the name of its issuer, the card number and the amount you wish to transfer.

Most credit cards with such offers let you transfer balances from multiple cards, provided that the total amount is less than your available credit limit. If the balance transfer amount exceeds your available credit, your card provider might process your transfers for less than the total amount requested, as is the case with the Discover it® Cash Back.

Once your card provider approves your balance transfer, it may take two weeks or more for the process to complete. It’s best that you factor this in when initiating your transfer and continue to make the minimum payments on your existing cards until the balance transfer is complete. While your new card provider might pay off your existing credit card debt directly, it might also issue you a check that you’ll then need to send to your existing card provider.

After a balance transfer is complete, you need to start making timely payments toward the new account. Most credit cards allow cardholders to set up automatic payment of the minimum amount due from your linked bank account. If you manage to pay off the entire amount within the promotional period, you pay no interest charges, although a balance transfer fee typically applies. Once the introductory period ends, any outstanding balance starts accruing interest at the card’s regular APR for balance transfers.


Napkin Math to Estimate the Savings of a Balance Transfer

Different variables are at play when it comes to calculating how much money you might save if you transfer a credit card’s balance to another card. These include the existing card’s APR, your outstanding balance, how much you pay each month, the duration of the 0% APR offer and the balance transfer fee.

Calculating how much you might save through a balance transfer requires determining how much interest you would end up paying if you keep using your existing card. Doing this requires converting your APR to a daily rate and arriving at your average daily balance.

Assume you have a card with a 19.40% APR. To convert this to a daily APR, you need to convert the percentage to a decimal and then divide it by 365. In this case, it’s 19.4 divided by 100, further divided by 365. The number you arrive at is the daily rate. In this case, it’s 0.00053.

If you plan to transfer the entire outstanding amount of a credit card, you may regard it as the average daily balance. Assume it to be $5,000.

To calculate interest charges, you need to multiply the average daily rate by the average daily balance and then by the number of days in the billing cycle. This would amount to 0.00053 x $5,000 x 30 (days in your billing cycle), or $79.50. That’s how much interest you’ll need to pay for the given billing cycle.

If you make a $500 payment, the outstanding balance will come down to $4,579.50 (after adding the $79.50 interest charge). With no further activity in the account, interest charges for the next billing cycle would be $72.81.

By maintaining the same $500 payment pattern, it would take you 11 months to repay the debt completely, and you’ll end up paying a little over $400 in interest.

The Savings

If you are to transfer the same $5,000 outstanding balance to a card with a 0% APR offer for 12 months and keep up with your $500 monthly payments, you’ll repay the entire amount before the promotional period expires. Assume that you need to pay a balance transfer fee of 3%, which amounts to $150. Subtract this by how much you would otherwise pay as interest, which gives you the amount you would save. In this case, it’s around $250.

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Look for a balance transfer card based on the time period of the 0% APR offer, the APR that applies after the promo period ends, the balance transfer fee, the annual fee and additional features. We’ve simplified how you may find the right alternative by reviewing over 1,600 consumer credit cards to date.

How Many Times Can You Do a Balance Transfer?

There is no limit to how many times you may carry out balance transfers, although they are subject to approval. While one-off balance transfers are a usual occurrence, hoping to clear off your credit card debt by repeating the process multiple times is fraught with challenges.

Transferring a balance more than once requires that you have a well-thought-out payment plan in place. For instance, if you feel you might be able to repay $7,000 of a $10,000 debt by using a card with a 0% APR on balance transfers for 18 months, you may consider opting to transfer the remaining $3,000 before the end of the promo period to another balance transfer card. However, the balance transfer will be subject to approval, and you might also need to pay another 3% to 5% balance transfer fee on the remaining $3,000 with the second transfer.

Think hard before transferring balances multiple times if you’re not serious about repaying your debt as quickly as possible. If you make just the minimum monthly payments after carrying out a balance transfer, you’ll still have a sizable balance left when the promo period ends. Then, you first need to go through the approval process of a new balance transfer card, followed by that of the balance transfer itself. If neither goes through, you’ll be burdened with the existing card’s standard APR.

Applying for any type of credit card in quick succession may have a negative effect on your credit score. This is also the case if you transfer balances that are very close to your new card’s credit limit because it would have an adverse impact on your credit utilization ratio. This refers to the amount of available credit you’ve utilized and should ideally remain at 30% or lower.

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Since most 0% APR promotions are derailed when a cardholder misses a payment, set up an automatic payment of the minimum payment due. This will prevent you from owing missed payment fees and losing out on the 0% APR offer. -- Lee Huffman, credit card expert at

Other Questions You May Have About Balance Transfer Cards

Determine whether you might benefit by taking this path after going through answers to other commonly asked questions about balance transfers on credit cards.

Next Steps

Now that you know how credit card balance transfers work, determine if following this path might be right for you. If you decide to move forward, look for a suitable balance transfer card based on factors such as the length of a card’s 0% APR offer, its regular APR, its annual fees as well as any additional features or benefits it might have.

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Learn More About Balance Transfer Credit Cards

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About Rajiv Baniwal

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Rajiv Baniwal is a journalist who has been covering financial topics for over 15 years. Meticulous in his research, he provides accurate and up-to-date information. His expertise includes mortgages, loans, credit cards, insurance and international money transfers.

*Rates, fees or bonuses may vary or include specific stipulations. The content on this page is accurate as of the posting/last updated date; however, some of the offers mentioned may have expired. We recommend visiting the card issuer’s website for the most up-to-date information available.
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