How to Do a Balance Transfer: A Step-by-Step Guide

Reviewing the details of your credit card debt can help you determine how much you’ll benefit from a balance transfer. Specifically, you’ll want to look at two details:

• The amount you owe
• Your current APR

Check your latest credit card statement or contact your credit card company to find this information. When you apply for a balance transfer card, you’ll need to know your total debt so that you can include it in your application. You’ll also want to know what APR you’re currently paying to make sure the new balance transfer credit card offers a better deal.

Once you know how much debt you want to transfer, it’s time to look for a balance transfer card. The card you choose determines the balance transfer fee you’ll pay and the amount of time you’ll have to pay off the balance before the regular APR kicks in.

Balance transfer fees can be a flat dollar amount or a percentage of the amount you transfer. A typical fee is often between 3% to 5% of the transfer amount, or a flat fee of $5 to $10, whichever is greater.¹

This means a $10,000 balance transfer could cost you an extra $300 to $500 in fees right from the start, so it’s important to factor that into your decision.

Here are some of the most important things to consider as you compare credit card transfer balance offers:

• Introductory APR (also called the promotional rate)
• Promotional rate period and how long you’ll have to pay down the balance interest-free
• Balance transfer fees
• Regular APR (that applies once the promotional rate period ends)

Review the terms and conditions carefully to ensure you understand what you’re agreeing to if you decide to move forward with a balance transfer to consolidate debt. If you have questions about something you don’t understand, call the credit card company for clarification.

If you’ve selected a balance transfer card, the next step is to apply. There are several ways you can apply for a balance transfer:

• Online through the card issuer’s website
• Through the card issuer’s mobile app
• Over the phone with a customer service representative
• Using a balance transfer check

On the application, you may need to provide the credit card company with the amount you wish to transfer and the card account number. Some companies will ask for this information after you apply.

You’ll also need to fill in your personal information, with details like your:

• Name
• Address and phone number
• Date of birth
• Social Security number

Keep in mind that applying for a new balance transfer card will trigger a hard credit check, which can decrease your credit score by five points or less.²

If you haven’t already, your next step is to tell the new credit card company how much you want to transfer and from which account. The credit card company does the rest.

After you provide the necessary information to initiate the balance transfer, the new credit card company will communicate with your current credit card company to arrange the transfer.

Note that a balance transfer isn’t the same as using a credit card to pay a credit card bill. That’s something credit card companies generally don’t allow you to do.

Once you submit your balance transfer application, the credit card company begins processing your request. So, how long do balance transfers take?

There’s no fixed answer, as every credit card company handles them differently. You might wait anywhere from two days to six weeks for the balance to be moved from your old card to your new one.³

If it’s been a few weeks and you’re not seeing any movement on the balance transfer, you can call the credit card companies to ask what might be causing a delay. In the meantime, you’ll want to continue making any required payments toward the balance to avoid a late payment fee.

Once the balance transfer goes through, you can work on paying down what you owe. The simplest way to do this is to take the balance you have to pay and divide it by the number of months until the promotional APR ends.

For example, if you transferred $10,000 with a 21-month 0% APR offer, you’d need to pay $476 and change each month to clear the balance. If you have a 12-month balance transfer offer, you’d need to bump that to $833 per month instead.

Reviewing your budget can help you decide what’s doable. If you don’t budget regularly, reviewing your checking account statements makes it easier to see where your money goes each month.

Whether you should transfer a balance depends on your individual situation. These tips can help you decide if a balance transfer could make sense for you.

• Check the credit score requirements. Checking the minimum credit score requirements of a card you’re eyeing can help you gauge your likelihood of being approved. You’ll need decent credit to qualify for a balance transfer card with a 0% APR promotional period.
• Add up the fees. Balance transfer fees are added to the amount you transfer, leaving you more debt to pay back. So, instead of paying off $10,000, you might pay back $10,500, assuming a 5% balance transfer fee. Finding a low-fee or no-fee balance transfer card can help you maximize your savings.
• Weigh the timing. The upside of a balance transfer offer is that you may be able to pay off your debt interest-free for a period of time. The downside is that the 0% APR won’t last forever. So, you’ll need to review your budget to ensure you can pay the transferred balance off before the promotional rate ends to avoid interest charges.
• Plan to put your cards away. Transferring a balance to save on interest can backfire if you charge up new balances on your cards. Before you move ahead with a balance transfer, ask yourself if you can commit to avoiding new debt while paying down what you owe.

If you decide a balance transfer is the right move for your financial goals, remember to compare card offers, pay close attention to the balance transfer fee and promotional period, and make a solid plan to pay off the debt before the regular APR kicks in. Taking these steps can help you use a balance transfer to effectively save money on interest.

If you’d like to compare balance transfers with other debt management strategies, learn more about how to consolidate debt using different methods.