People who have outstanding debts might consider switching cards in search of better interest rates and benefits. Transferring your credit card balance is, however, not without its risks.
Before you do so, it’s crucial to understand the process, the advantages, and the possible pitfalls to ensure you get the result you’re looking for.
It makes sense that if you’re in debt, you’d want to transfer that from a high-interest card to another more lenient one. If you’re wondering how to transfer a credit card balance, you’ve come to the right place; we’ll walk you through the process.
Read on to find all the necessary steps you’ll want to take, some explanations you should keep in mind, and all the potential drawbacks to be aware of.
After all, it would be a shame if instead of solving the problem, you just end up in an even worse situation than you were before. So, read up, do your research, and don’t hold your breath – credit card balance transfers are far from miracles. It can take time, patience, and most of all, discipline!
Credit card balance transfers are exactly what they sound like: transfers of the balance (the amount you owe) from one credit card to another. Typically, you’d attempt this if your current interest rate is colossal and you want to reduce this for the rest of your balance.
There’s nothing wrong with that. After all, being able to meet your minimum payment isn’t always enough to cover your past expenses. Interest rates vary wildly between cards, too.
So, if you have a solid plan for paying off your debt and a lower interest rate could help you accomplish it, then transferring to another credit card might prove to be the best course of action for you.
In a 2021 survey, 78% of respondents said the most significant benefit of transferring a credit card balance is that it helps pay off existing debt and reduce high-interest credit card debt.
However, in the same survey, more than 55% of people said they don’t plan to transfer their own balances, even though they have outstanding debt. This hesitance is the result of many misconceptions, among them that the transfer affects your credit score.
In reality, the effect is minimal, so you can still save potentially thousands of dollars on interest.
Balance transfers are primarily about using one card to pay off the debt you have on another. Some companies offer introductory deals to encourage you to transfer. For just the transfer fee – which usually ranges from 3% to 5% – you could get interest-free payments for up to 18 months with a new credit card.
You should be looking for a better deal than you had before, so search for offers that include a promotional period during which you can enjoy a 0% APR credit card.
From there, your new creditor makes a payment to your previous one, bringing your previous balance to zero. Your new card will now hold your balance from the old account.
When trying to figure out how to transfer a credit card balance, you should pay attention to a couple of things.
First, you need to find the right credit card to transfer your debt to. This could be tricky, as with so many available offers, picking the best new card might seem like “Mission Impossible.”
Make sure you double-check the cardholder agreement to see what the regular interest will be once the introductory period is over. In case you don’t manage to pay your balance off in time, you don’t want to be stuck with even worse retroactive interest charges than you had before.
Read the fine print carefully: there could be conditions to the introductory period as well.
Speaking of the time, you might want to consult a balance transfer calculator before making any decisions. This simple tool will help you work out how long you’ll need to pay off your debt.
Once you know this, you can look for credit card options that give you a generous enough introductory period to work your balance off before the interest kicks back in.
Lastly, but most importantly, you need to create a debt payoff plan. It’s advisable that you structure your debt so that you can pay it off within a reasonable timeframe. Otherwise you’ll just be postponing the inevitable and letting your debt grow uncontrollably.
The actual process is relatively simple, but it can take a painfully long time, so be prepared.
First, you want to find the card to which you wish to transfer your balance. This could be any card of your choice, but be careful to note the transfer card’s credit limit. It might be lower than what you actually need, especially if you’re looking to move multiple balances.
Once you’ve chosen the card you’ll use, simply follow the creditor’s instructions. Each of them has its own way of managing balance transfers and rules on the types of debt that you can transfer. We’ve listed the most common options below.
You can do the transfer yourself online through your account with your creditor. This is the standard solution if the balance transfer is to an existing credit card, and it’s probably also the fastest.
Typically, if the balance is transferred to such a card, it takes less time than it would take to open a new one. You probably won’t be able use this method for a same-issuer transfer though.
In this scenario, you’d provide your new credit card company with your old account information. The company would take it from there and transfer the credit card balance from your old account.
Some companies supply their new cardholders with checks. From there, you would fill in these checks to your previous creditor company, which would cover the balance on your old card.
Other companies let you fill these checks out by yourself, but you should be careful with this. Make sure the checks you fill in for yourself are not, in fact, a cash advance of any kind so as to avoid potential confusion.
The last option is pretty straightforward and similar to the first one: all you have to do is supply the new creditor with your former account details via phone, then the company will handle the rest.
While there is no rule of thumb as to how long this process will take, the average time is around seven days. If you need more precise information, here is a table featuring some of the bigger issuers and their timeframes:
|Label 1||Label 2|
|Bank of America||5-14 days|
|U.S. Bank||Up to 14 days|
|American Express||5-7 days|
|Capital One||3-14 days|
|Chase||Up to 21 days|
The biggest mistake you could make would be to go through with the transfer but continue with your old approach to credit. Now that you know how to transfer a credit card balance, here are some tips on how to change your habits so you won’t need to do so again.
Residual debt – by which we mean late fees or last-minute interest fees – can catch you unaware. Keep an eye on your old account for a month or two after the transfer to pay off any new balances.
Automatic payments are probably the greatest thing since sliced bread for people who struggle to organize their finances.
If you have a habit of skipping your payments (or even skipping your breakfast), make sure you set up auto-payments as soon as you’ve finished transferring your credit card balance.
Bad things happen. You could lose your job then face a colossal interest rate when your 0% APR period is over. In some situations, these post-introductory interest rates could negate all the savings you’ve managed to make.
It’s advisable to have the option of transferring to at least one other 0% APR card in the worst-case scenario.
Transferring your credit card balance simply for the sake of buying time to “get rich enough to pay off all your debt” isn’t a good idea.
However, with a proper payoff plan, it’s another story entirely. If you’re determined to make every payment and keep your spending under control, transferring credit card balances to another card could be the solution you’ve been looking for.
Once you’ve set up a 0% APR credit card to which you’d like to transfer your balance, you should check out your creditor’s instructions.
You’ll have to provide your new creditor with the information they need to be able to cover your debt with the previous creditor before transferring your balance to a new card.
Normally, this will be handled by using balance transfer checks, via phone, or simply through your online account. However, you can always set up a meeting and check how to do a balance transfer properly with your creditor.
Balance transfers initially seem like they will strike a big blow and lower your credit score, but in reality the impact is minuscule. It all depends on how you handle the whole process.
For example, once you make sure the original card is paid off, try to keep the account open for a while instead of closing it immediately.
From the moment you transfer your credit card balance to a new card, your old credit card balance should be $0, and your old balance will appear in full on your new card. Once you start using your new card, make sure you establish good habits by keeping up with your regular payments.
Setting up autopay is one way to do this.
If you decide to seriously tackle your debt and follow through with a well-devised plan that caters to your own needs, then there shouldn’t be any major downsides to a balance transfer.
When researching how to transfer a credit card balance, many people are concerned about this. However, it all boils down to your own dedication to freeing yourself of debt.
Yes, a balance transfer counts as a payment. To make the process happen, your new credit card company will have to issue a payment to the old one, using your credit card number as a reference. This is the same process you would use to make other payments with your card.