A balance with a credit card on one side and stones representing debt on the other to symbolize the choice you make with balance transfer cards.Image: A balance with a credit card on one side and stones representing debt on the other to symbolize the choice you make with balance transfer cards.

Credit Karma Guide to Balance Transfer Cards

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If you’re struggling with high-interest credit card debt, Credit Karma’s got your back. In this guide, we’ll walk you through balance transfer cards — one of the ways to save money on interest and get out of debt faster. First, we’ll review what a balance transfer is and break down how it works. Then, we’ll show you how to shop for the right balance transfer card for you.

If you’re struggling to pay off your high-interest credit card debt, it can feel almost impossible to get ahead. You’re making payments, but interest charges prevent you from chipping away at your debt as quickly as you’d like.

Let’s say your credit card’s annual percentage rate is 15%, which puts it right around the national average. If you’re thousands of dollars deep in credit card debt and only making the minimum payment each month, it could take you years to climb out.

But what if you could take that high-interest balance and transfer it to a new credit card with a lower interest rate? Better yet, what if that new interest rate could be as low as 0% for a limited time?

That’s the idea behind balance transfer credit cards. These cards can be a great way to save money on interest while putting more toward your principal balance.

Just keep in mind, balance transfer cards aren’t a cure-all and should be used with careful consideration. In this guide, we’ll teach you what you need to know about balance transfer credit cards and dig into some of our favorites. We’ll also show you some common pitfalls to look out for when considering a balance transfer.

What is a balance transfer?

Before we wade too far into the nitty-gritty, let’s get our terms straight. Maybe you’ve heard the term “balance transfer” when shopping for a new credit card, or maybe you’ve received a promotional email from your issuer inviting you to “consolidate higher-interest balances.”

As its name implies, a balance transfer allows you to transfer a balance from one credit card, or multiple cards, over to another credit card.

Why bother doing this? Because a balance transfer may allow you to pay low or 0% intro interest on your consolidated balance for a set period of time. That means you can pay more money toward your principal, which can cut the time it takes to repay your debt.

So for example, let’s say you currently carry balances on three credit cards, all with relatively high interest rates.

Using a balance transfer credit card, you could consolidate all of those balances on a single credit card that offers 0% intro APR for a limited time. Here’s a table to help you better understand.

High-interest credit card balances Balances consolidated on a balance transfer credit card
Card 1: $2,000 (15% APR)

Card 2: $1,300 (17% APR)

Card 3: $1,200 (20% APR)

$4,500 (0% intro APR for the first 12 months)

Through a balance transfer, you can simplify your credit card debt while also saving money on interest.

Who should apply for a balance transfer card?

Let’s start off by saying this: Balance transfers are definitely not for everyone. Though they can be extremely useful when you’re trying to get out of debt, they can also dig you even deeper into the debt trap if you don’t understand how to use them.

Wondering if a balance transfer is right for you? Start by asking yourself these two questions.

  • Do I carry a balance on my credit cards?
  • Am I paying a high interest on that balance?

If you answered “yes” to both of those questions, you might want to consider a balance transfer credit card. Paying off credit card debt can seem like an uphill battle when so much of your money goes to interest charges, and that’s where a balance transfer can help.

But remember: A balance transfer won’t magically get rid of your debt. You’ll still need to have a plan in place to pay off your debt, or at least make serious progress. Without a strategy, you could just be shuffling around debt from one card to another.

Travis T. Sickle, CFP® at Sickle Hunter Financial Advisors, has seen this mistake repeated too many times. He advises people to understand why they got into debt in the first place and address those issues before applying for a balance transfer credit card.

“The root of the problem needs to be addressed, or it’s really just a band-aid on a long-term problem,” he says.


Beware the debt-consolidation ‘feels’

Debt consolidation can be a big relief. When you “pay off” multiple debts with a balance transfer credit card or personal loan, you eliminate the stress of juggling lots of bills and due dates. You’re caught up on payments, and your credit card balances go back to zero. On top of it, most people see their credit scores jump after consolidating debt, according to a 2019 TransUnion study.

But be careful: You don’t want all the good feels — like higher confidence and a sense of control — to make it seem OK to start swiping those cards again. That could create worse debt and stress than you had before.

How to deal? Get some support. The Consumer Financial Protection Bureau recommends getting credit counseling before you consolidate. Also, a financial mentor — someone with sound financial habits that you know and admire — may help motivate you to stay on track day to day, says Sarah Newcomb, behavioral economist at Morningstar.

To recap, a balance transfer credit card could be a good fit if …

  • You’re struggling to keep track of all of your payments and want to simplify your debt.
  • Your current interest rates are getting in the way of your debt repayment.
  • You’re serious about getting out of debt.
  • You have a strategy to pay down your debt during the promotional period, when the low or 0% intro interest rate still applies.

What are the pros and cons of a balance transfer?

By this point, you should have a pretty good idea of whether a balance transfer is right for you. But if you’re still confused, it can be helpful to review the pros and cons. As noted above, a balance transfer can be a great way to save money, but it’s not the right solution for everyone.

Let’s weigh the good versus the bad and see where the scales tip in your situation.

Pros Cons
  • Can help you simplify debt
  • You could pay a low or 0% interest rate for a limited time
  • You can transfer your balance to a better card with rewards or a lower regular APR for purchases
  • Balance transfer fees may apply
  • You may risk getting into more debt if you don’t pay off all or most of your balance during the promotional period
  • The promotional period is temporary and often followed by a high regular APR

As you can see, a balance transfer credit card can help you streamline your debt repayment and consolidate your credit card debt. But if you’re not careful, you run the risk of getting into even more debt.

Nice card if you can get it

Be aware that you need to be approved for a balance transfer card before you can actually use it.

Pretty obvious, right? The problem is, getting approved for a balance transfer card isn’t always easy. Depending on the card, it may require good or even excellent credit.

If you’re not sure where you stand in terms of your credit, we can help. With Credit Karma, you can get your free credit scores and credit reports from TransUnion and Equifax, and we’ll point out important items to help you understand what’s on your reports.

Time isn’t always your friend

A low or 0% intro APR is nice, no question about it. But those kinds of offers typically only apply during a temporary promotional period. After that period is up, your interest rate could be significantly higher.

What’s that look like in practice? Let’s check it out.

Say you get approved for a balance transfer credit card with 0% intro APR on purchases and balance transfers for the first 15 months. To make the most out of the balance transfer, you’ll want to pay off your full balance within that 15-month time frame. If you don’t, the regular variable APR will apply to your remaining balance — and it may be even higher than your previous high interest rates.

That’s why it’s important to read through the terms and conditions and understand what your credit card’s regular variable APR looks like. You’ll also want to make sure you can work toward paying off your debt during the promotional period, or else you might not save that much money after all.

Watch out for balance transfer fees

Lastly, it should be noted that many balance transfer credit cards have balance transfer fees.

“You will almost always be charged a balance transfer fee, which is determined by the bank and is based on how much money you’d like to transfer,” says Natasha-Rachel Smith, consumer affairs expert at TopCashback.com.

These fees typically range between 3% and 5% of the transferred balance, which could add up to a serious chunk of change. (There are some cards that have no balance transfer fees during limited introductory periods, as well.) To understand how much of a bite that balance transfer fees can take out of your balance, take a look at the guide below.


How much can balance transfer fees cost you?

Before applying for a balance transfer card, look at the fees and calculate what it’s really costing you.

For example, say you want to transfer $4,500 to a card with a 3 percent balance transfer fee:

Balance to transfer: $4,500

Balance transfer fee: 3 percent

What you’ll pay: $135 ($4,500 x .03)

In this case, you’ll pay a $135 fee for the convenience of transferring your balances. If you stand to save a lot of money in interest charges, the fee may be worth the cost. If not, it could just be an extra fee — and nobody likes those.

If you’re worried about balance transfer fees, look for a balance transfer credit card with no balance transfer fee. Keep in mind that those offers of $0 introductory balance transfer fees are typically for transfers made during the first month or two of account opening.

How do balance transfers work?

Balance transfers are a process.

In order to complete a balance transfer, you’ll first need to review your current credit card balances and interest rates. Then, you’ll need to find and apply for a balance transfer credit card with a low interest rate or a 0% introductory offer.

How to apply for a balance transfer credit card

Make no mistake: There are a lot of balance transfer credit cards out there. So how do you pick one? Research plays a big role, but ultimately you’ll want to find the card that’s best for you. If you’re looking for a place to get started, you can compare offers for balance transfer credit cards on Credit Karma.

Checked your credit scores and ready to apply? Go ahead! Typically, you’ll be asked to provide your current credit account information (i.e., the account numbers of your old cards and how much of your balance you want to transfer) to the credit card company. If you’re approved, you may be able to transfer all or a portion of your existing debt, depending on the credit limit you’re offered.

If you’re not approved for a credit limit that allows you to transfer all your debt, weigh the costs to see if it’s actually worth it.

For example: If you’re transferring $4,500 but were only approved for a $3,000 credit limit, you’d still have to keep at least $1,500 on your old account balance. The consolidation/simplification benefit would be lost, but you may still be able to save some money on interest.


How to get the most out of a balance transfer

If you want to make the most out of a balance transfer, look for a card that has no balance transfer fees. This can save you some money, which can be used toward paying off your principal.

Additionally, be mindful of how long the promotional period is. You’ll want to make sure you can pay off your debt during this time frame, so calculate what you would need to pay each month to pay off your debt during the promotional period.

If the amount seems like too much to handle, see if there is anywhere you can cut back in your budget. You may also consider taking on a side gig to earn a bit more each month. A side job is anything you can do in your free time to make extra cash, like babysitting, pet sitting, graphic design, etc. Use your skills to make extra money.

The key is to limit fees and focus on paying off debt before the promotional APR is up.

I’m approved! Now what?

Upon approval, the new balance transfer credit card will essentially pay off your existing credit card debt and you’ll be left with one payment and (hopefully) a lower interest rate.

The process of transferring your balance may differ from card to card. For example, with Chase you can go online and select your card, enter the amount you want to transfer, as well as your credit card info, and then complete your transfer. You may be able to transfer your balance over the phone as well as online, so check with your credit card company about the proper procedure.

A balance transfer may take one to two weeks or even longer to process. It’s important to stay up to date on your payments until the transfer goes through, or you may risk getting hit with late fees.

Once the transfer has been processed, you can start making payments on your new balance transfer credit card account and hopefully conquer your debt during the promotional period.


How to do a balance transfer in 6 steps

So you’ve decided you want to do a balance transfer, but how do you actually get started? We’ve broken down the process into six simple steps.

  1. Check your current balance and interest rate.
  2. Pick a balance transfer card that fits your needs.
  3. Read the fine print and understand the terms and conditions.
  4. Apply for a balance transfer credit card.
  5. Contact the new credit card company to do the balance transfer.
  6. Pay off your debt.

Does a balance transfer card affect my credit?

If you’re trying to get your credit in shape, you might wonder how exactly a balance transfer affects your credit. Will it hurt or help?

As it turns out, it can do a little bit of both.

Your credit scores might drop by a few points after you apply for a balance transfer credit card. Whenever you apply for a credit card of any kind, there’s a hard inquiry on your credit reports, which could result in a small drop.

The good news? In most cases, a single hard inquiry is unlikely to play a big role in whether you’re approved for a new card or loan. And if there is any damage to your credit scores, it will gradually decrease over time.

On the other hand, getting approved for a balance transfer could boost your credit limit and lower your overall credit utilization. But it depends. If you get approved for a balance transfer card with a credit limit of $3,000 and transfer that same amount, you’ll be using 100% of your available credit on that card. And that’s not necessarily a good thing. Most experts agree that your credit utilization ratio should ideally be below 30% for all of your open lines of credit. If you end up closing your old account and your ratio soars higher, it may affect your credit.

“Don’t cancel your existing card,” advises Smith. “While it might be tempting to close the credit card to prevent yourself from overspending or racking up additional credit card debt, canceling your card could actually hurt your scores.”

We generally agree — if you’re going to close an old credit account, be very careful. And make sure it’s not your oldest account, as that can have a significant effect on the length of your credit history (one of several factors used to calculate your credit scores).

What should I look for in a balance transfer credit card?

As you’ve probably gathered by now, there are many balance transfer credit cards to choose from. Here are some important things to consider when shopping around.

  • Is there an annual fee?
  • How long is the promotional period?
  • What is the APR after the promotional period ends?
  • Is there a balance transfer fee? If so, how much is it?
  • Is there a time frame in which you must complete the balance transfer?
  • What are the transfer limits?

Answering these questions can help you evaluate various balance transfer credit cards and find the best option for you.

What’s next?

If you’re feeling stuck in credit card debt and looking for an option to simplify and save, a balance transfer credit card can be a good fit.

Just be honest with yourself and make sure you aren’t using the card as a temporary fix for a bigger problem. Getting out of debt can be a wonderful, freeing thing — but not if you immediately sink back into bad habits.

When used responsibly, a balance transfer credit card can be a useful tool. Use this guide as a reference and start your research to decide if a balance transfer is the right route for you.

You don’t have to go it alone. Here are some next steps we think could be helpful.

About the author: Melanie Lockert is a freelance writer and editor currently living in Portland, Oregon. She is passionate about education, financial literacy and empowering people to take control of their finances. Her work has been f… Read more.