Applying for and using balance transfers

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Applying for and using balance transfers


If you're carrying a balance on one or more high-interest credit cards, a balance transfer card can save you money and help you pay down your debt.

Balance transfer cards offer very low transfer rates for bringing a balance over from a different card. If you're paying a lot in interest on your current credit card balances, transferring those balances could benefit you in two different ways.

  • Low interest to pay down balances. With the low rates that come with many balance transfer cards, you can keep your monthly payment the same and more of it will go toward reducing your balance because less of it will be going toward paying interest.
  • Consolidate debt to simplify payments. If you're currently carrying a balance on several cards, balance transfers can enable you to consolidate all of those different monthly payments onto one card. You'll benefit from the lower rate, and you'll be less likely to miss a payment, as there's only one to keep track of!

Applying for a card - things to watch out for

If you aren't careful, the wrong balance transfer offer can land you in an even worse position than when you began. It's important to be realistic about your payment goals and fully understand what you're getting into to make the most of a balance transfer credit card. Here are some important factors to consider.

  • Transfer rate. Most offers include a 0-3% introductory interest rate that usually lasts 6-18 months, depending on the offer. Make sure you know how long your interest rate will last and what it's going to jump up to afterward. If you aren't able to completely pay off your balance during the introductory period, you could end up with an even higher interest rate than you started with. If this is the case, you may want to specifically look for a card with a lower APR for the long-term.
  • Transfer fee. Most cards will charge a 3-5% balance transfer fee. This means that if you're going to transfer a total balance of $8,000, you will have to pay an additional $240-400 off the bat. Make sure to keep this in mind when deciding whether a balance transfer card is right for your current financial situation.
  • Transfer window. Some balance transfer cards require you to transfer your balance within a certain amount of time to be eligible for the transfer rate. Make sure to look into any perks or limitations that are tied to transfer windows.
  • New bank. Most offers require that the balance being transferred comes from a different bank. If you're looking at an offer from your current lender, verify that you will be able to transfer the balance you hope to.
  • Approval odds. Due to their competitive rates, balance transfer cards often require borrowers to have excellent credit. Make sure to consider your own credit score when applying for a balance transfer card, and try to apply for cards that you are well-qualified for.

Using your card

Once you've received your card and transferred your balances, make a point to use your new card responsibly. Here are some things to keep in mind.

  • Avoid balance transfer surfing. This is the practice of transferring your balance to a new card every time the introductory period ends to avoid paying interest. In short, don't do it. Doing so will end up costing you a lot in balance transfer fees and can actually increase your debt. In addition, it will reflect poorly on your credit history. Borrowers who constantly move their balances around low-interest cards do not reflect responsible borrowing habits.
  • Minimize new purchases. To make the most of a balance transfer, you should avoid making new purchases. Try to focus on aggressively paying down as much of your balance as possible before your introductory period ends. If you do need to make new purchases, be aware of the interest rate you'll be charged. With balance transfer offers, the introductory rate often applies only to the balance transfer itself, and new purchases may be charged the regular APR from the beginning.
  • Know how payments are applied. If you do end up paying for new purchases at a different APR, know how your payments are going to be applied. The CARD act requires that any payment amount over the minimum payment be applied to the highest interest debt on the account. However, the minimum payment itself may be applied to the lowest interest debt. This could mean that you end up paying off your 0% balance transfer while your new purchases accrue interest.
  • Be wary about closing old accounts. Now that you've transferred the balances from your high interest cards, you may be tempted to close these old accounts so you don't run them up again. Before doing so, make sure that you consider the implications this could have for your credit health.

Bottom line

Before applying for a balance transfer card, figure out how long you can take advantage of the introductory rate and how much of your balance you'll be able to pay down in that time. If you'll be able to make a significant dent in your debt by taking advantage of the low rate, even when you factor in the balance transfer fee, you should consider applying for the offer. However, if you're considering a balance transfer offer just to take a break from interest and plan to continue accruing debt, it could end up working against you. The transfer fee will increase your balance off the bat, and the interest-dodging habit can reflect poorly on your credit. Be honest with yourself and set realistic goals. Use balance transfers to take charge of your debt, not to avoid it.

About the author: has been a Member Support Specialist at Credit Karma since December 2013. She can usually be found riding bikes around town late at night, communing with animals and eating sweets.

Editorial Note: The opinions you read here come from our editorial team. While compensation may affect which companies we write about and products we review, our marketing partners don't review, approve or endorse our editorial content. Our content is accurate (to the best of our knowledge) when we initially post it, but we don't guarantee the accuracy or completeness of the information provided. You can visit the company's website to get complete details about a product. See an error in an article? Use this form to report it to our editorial team. For questions about your Credit Karma account, please submit a help request to our support team.

Advertiser Disclosure: We think it's important for you to understand how we make money. It's pretty simple, actually. The offers for financial products you see on our platform come from companies who pay us. The money we make helps us give you access to free credit scores and reports and helps us create our other great tools and educational materials.

Compensation may factor into how and where products appear on our platform (and in what order). But since we generally make money when you find an offer you like and get, we try to show you offers we think are a good match for you. That's why we provide features like your Approval Odds and savings estimates.

Of course, the offers on our platform don't represent all financial products out there, but our goal is to show you as many great options as we can.

All Comments

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1 Contribution
124 People Helped

Helpful to 124 out of 128 people

Know How Payments Are Applied. If you do end up paying for new purchases at a different APR, know how your payments are going to be applied. The CARD act requires that any payment amount over the minimum payment be applied to the highest interest debt on the account. However, the minimum payment itself may be applied to the lowest interest debt. This could mean that you end up paying off your 0% balance transfer while your new purchases accrue interest.

This is very good info.. only part I didn't know - but very helpful. Thanks.

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1 Contribution
20 People Helped
Helpful to 20 out of 23 people

sounds better to me. lloyd

1 Contribution
93 People Helped

Helpful to 93 out of 99 people

Without knowing how much you'll be approved for until after your approved, how do you know if it'll accept the entire balance transfer amount? Wish I'd known that on my $3000 balance they only accepted $2000 but that's still ok I guess for 15mths. I don't plan on using the new card until its all paid off and in the meantime I use my 8mnth zero APR on purchases card.

I agree with this article esp the final conclusion on not using the cards at all until you pay them off or relatively down. Its about discipline when it boils down to it.  Use balance transfers to take charge of your debt, not to avoid it. Good point

1 Contribution
89 People Helped

Helpful to 89 out of 100 people

Be very wary of these offers on Karma, they try and convince they will save you money, but all of them are 4-20 % higher interest rates than any of my current balances.

1 Contribution
53 People Helped

Helpful to 53 out of 59 people

KK keeps offering me a balance transfer but I am not sure that I want to go with another card.  If I do end up doing a CC transfer it will be with my bank and I will transfer the ammount to that account, but not at this moment I am sort of waiting for the new year and junk.  My other opotion is to just let sleeping dogs lie because I am current on all my payments so I am not concerned, very much, even if I could save money with a balance transfer.  Like someone said earler I am not sure that even if I got approved for the ammount that I need to cover my debt there is no ganturee that the card will accpect the full balance of my transfer.  I think I will just end up putting more cash on the payments per month and call it good till the card is paid off.   I did how ever refincied one of my other car lones with a bank that gave me a kick butt interst rate, that was very cool and I did that based on what KK reccmoned, but I did not use their services.  I find that if you talk to your bank they seem to offer you the better deals, but thats just my experiance.  My advice is that if you ever want to get a credit card, just take a hammer and smash your hand with it, that should stop you from thinking of using a credit card. 

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50 People Helped
Helpful to 50 out of 54 people

I agree.  It's all about discipline.  If smashing your hand with a hammer works for you, then good for you.  Debt is never a good thing unless you are using it to buy an appreciating asset.  Debt is a business killer, robs your family of necessary purchases, and quietly steals from you every day.  The wise older generation used to say, " If you can't afford to pay cash for something this month, can't you just wait one more month and buy it then?"    Many times I have got out that hammer again and waited one more month.  My money seems to go much farther without handing interst money to a bank every month.

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80 People Helped
Helpful to 80 out of 81 people

You don't need to transfer the entire amount of one high intrest card to a zero intrest card in order to take control of your finanaces. Transefer maybe half of the amount to make the monthly payments more manageable so you can aggressively pay them down. if you can get them paid off within the zero intrest time line before the APR kicks in the better. Just  don't get out of control and transfer to multiple cards with zero percent and end up spreading yourself thin to where you end up being in a situation to where you can't keep up on the payments once the APR goes into effect. I recently took half of the balance of one of my cards and trnasfered it to a card with a zero intrest rate for 14 months. My plan is to make double payments of the minium due each month, if not more so I can have them paid off before the 14 months are expired. it will bring the minuim due on the first card down to a more manageable amount due where I can be more agressive than i am able to now. My goal: be completely debt free by 2016(2 years). I am close and I know it can be done. THe first card has long since been destroyed to avoid temptation of more spending and the new card will be destroyed upon recieving it to also avoid tempetation of more spending. I use my debit card for all my purchases which is linked to my checking money in the account equals no spending...I leave enough in there to apy my bills each month plus $100 for gas and food and what is left over goes to savings. I also have $200 automatically transfered to savings every payday to build my savings. out of sight out of mind.

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4 Contributions
658 People Helped
Helpful to 22 out of 22 people

Being debt free is great, but from what I understand now about credit scoring is, you have to use some credit to keep your score healthy. Mortgages and auto loans only make up a percentage of your credit utilization and income to debt ratio. Once you arrive in a comfortable credit position, just don't try to over-extend yourself (carrying large balances on credit cards), (applying for more loans) etc....

A credit card can be a wonderful tool in an emergency for unexpected expenses. Just pay it down to under 30% useage to keep your credit score healthy, and save the rest of your limit for an emergency.

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4 Contributions
658 People Helped
Helpful to 4 out of 5 people

Refinancing an auto loan also seems very tempting to reduce your monthly payment and/or interest rate. I could benefit from that currently.

However, one would also have to consider that lengthening the term of an auto loan will also obligate you to carry full coverage auto insurance on an older car for the full term of the new loan. Throwing that into the equation will reduce your overall savings in the long run. Sometimes, if it's too good to be true, think again! lol

1 Contribution
42 People Helped

Helpful to 42 out of 45 people

One problem CK is neglecting to point out is a new transfer card will automaticaly lower your score, sometimes signifcantly! i also leave a little balance in the transferrig cards. Zero .seem to have a negative impact to some odd degree. .

1 Contribution
30 People Helped

Helpful to 30 out of 32 people

"Borrowers who constantly move their balances around low-interest cards do not reflect responsible borrowing habits."


What a surprise... we play the game by the rules and the banks penalize us for it by damaging our credit, thus giving us higher interest rates or no credit at all.

They play the game while breaking the rules AND still manage to lose the game...  but they get bailed out, get their annual bonuses and their golden parachutes remain in tact.

Seems to me the credit bureas are little more than a legal method of collusion for the banks.

7 Contributions
48 People Helped

Helpful to 43 out of 48 people

How do you make sure you apply for a limit that will sufficiently cover what you want to transfer?

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11 Contributions
76 People Helped
Helpful to 41 out of 46 people

You do not ask for a limit.   They tell you what they will give you to start with and most will up the limits when they see you are paying on time and using your card responsibly.

1 Contribution
17 People Helped

Helpful to 17 out of 18 people

What I like about credit Karma is it shows you your activity and what all you have out there, what I don't like is the fact the "recommendations" it gives on loans or credit cards their interest rates are killers so you had better look before you leap!!

2 Contributions
9 People Helped

Helpful to 3 out of 3 people

If we transfer balances to save interest, it will be counted against us as a hard inquiry, therefore bringing our score down Right??????

Credit Karma Team
Top Contributor
2949 Contributions
4502 People Helped
Helpful to 2 out of 2 people

If you open a new account, a hard inquiry will be added to your report. Keep in mind that hard inquiries are one of the least impactful credit score factors, and the effects on your score are temporary. 

1 Contribution
7 People Helped

Helpful to 7 out of 9 people

What about if you have monthly payments on your other credit cards?

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