Credit cards

How to save money with balance transfer credit cards

Credit card balance transfer analysis

Kittiphan Teerawattanakul / EyeE


When you’ve carried a credit card balance long enough, you may start to feel like you’ll never pay it off. And the longer you wait to pay it off, the more interest charges you accrue over time. This is the kind of debt that can become overwhelming.

That’s when a credit card balance transfer can help. An online marketplace can help you compare lenders and see what each company has to offer. Find a card that fits your needs.

Here’s what you need to know about what a balance transfer is, how it works, and (most importantly) how it can potentially save you money on interest charges.

What is a balance transfer?

A balance transfer involves moving an existing balance from a credit card with a high interest rate to a new card – usually one with a 0% APR. These special introductory APR offers last for a limited time, usually between six and 21 months. During this time, no interest will accrue on your balance and all your payments will go directly to the principal.

Cardholders will be charged a balance transfer fee, usually 3% or 5% of the balance. For example, if you transfer $5,000, the fee could cost $150 or $250.

How to save money with a balance transfer

If you can afford to pay off the balance before the 0 interest offer expires, you could save hundreds or even thousands in total interest. Check out some of the offers to see how much money you could potentially save.

Let’s say you owe $5,000 on a card with 15% APR and you qualify for a card with 0% APR for 12 months and a 3% balance transfer fee. You are able to pay off the balance before the 0% APR intro period expires, saving you $1,073.89 in total interest. Use a balance transfer calculator to see how much you could save.

Even if you can’t repay the entire amount before the intro APR expires, you can still save money by paying off most of the balance before the higher rate takes effect.

How to Choose a Balance Transfer Card

Not all balance transfer credit cards are created equal.

There are several things you need to consider when choosing your card.

  1. A credit card with the longest APR intro period. This will give you more time to pay off the balance. Many cards offer 0% APR on purchases and balance transfers, but sometimes the APR introductory time is shorter for balance transfers than for new purchases. Make sure you understand how long the balance transfer offer lasts and whether new purchases are subject to interest charges.

  2. A credit card with no annual fee and other benefits. Look for cards that also offer other benefits, such as cash back when you make certain purchases or a sign-up bonus if you spend a certain amount within 90 days. Just make sure you don’t end up with a large balance that you can’t afford to pay off.

  3. A card with low balance transfer fees. The lowest available is usually 3%, but there may be cards that charge no balance transfer fee. However, if you find a card with a longer APR intro period, paying a higher balance transfer fee may be worth it.

Note: You cannot transfer your balance to the same card issuer that you currently have. For example, if you have a balance on a Wells Fargo credit card, you cannot transfer that balance to a new Wells Fargo card and still qualify for the introductory APR offer. You must choose a new credit card company.

What to know before applying for a balance transfer card

Most credit card companies will only provide the introductory APR offer if you make your payments on time. If you pay late, the company may cancel the offer completely.

To avoid this, set up automatic payments on your card and arrange for payment to be made a few days before the official due date. Then create a reminder on your phone to sign in and double check that the automatic payment has been made.

Additionally, you must transfer the balance yourself by calling your current credit card issuer or logging into your online account. Be sure to start this process as soon as the new map has been opened. The APR intro offer countdown begins when the account has been opened, not when the balance has been transferred. If you wait too long, the balance may no longer qualify for the interest-free discount.

Most balance transfer offers are only open to consumers who have a credit score between 700 and 750, but some cards will approve those with a score between 650 and 700. If your credit score is below this range, you may need to wait and improve your credit score before requesting a balance transfer.

Having a credit card balance can be a symptom of overspending. Before you request a balance transfer, start tracking and budgeting your expenses. You need to fix the habits that got you into credit card debt before requesting a balance transfer, otherwise this strategy will only be a temporary fix and not a long-term one.