How to do a balance transfer in 6 steps

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In a Nutshell

A balance transfer can be a great way to save money on interest and pay off debt faster, but where do you start? With this step-by-step process, we've broken down how to do a balance transfer.

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If you’re stuck in credit card debt and feel like you just can’t get ahead because of interest charges, you may wonder what you can do.

As of June 2017, the average credit card interest rate is around 16.49%, and if you have several thousand dollars of credit card debt, it may be tough to climb out.

The good news is there are balance transfer credit cards out there that offer a low introductory APR and can help you pay off debt.

Here’s how to do a balance transfer in six 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 card.
  5. Contact the new credit card company to do the balance transfer.
  6. Pay off your debt. 

1. Check your current balance and interest rate.

Before you do a balance transfer, empower yourself with information about your current situation.

Review your credit card balances and interest rates. Your credit card interest rates are typically expressed as an annual percentage rate (APR). You’ll need this information so you can pick an appropriate card for a balance transfer.

Ultimately, you want to find a balance transfer card that has low or no balance transfer fees and can accept the amount you want to transfer.

2. Pick a balance transfer card that fits your needs.

Now that you know what you owe and what your APR is, it’s time to choose a balance transfer card that fits your financial needs.

Luckily, there are lots of options out there. Some things you should consider include how much money you want to transfer. You may not be able to transfer all of your debt to a balance transfer card.

You should also consider how long the introductory APR period lasts and whether it applies to both balance transfers and purchases.

Most balance transfer cards offer a 0% introductory APR on balance transfers for a set amount of time, and typically purchases as well.

For example, Chase Slate® could be a great option for a balance transfer. It offers a 0% intro APR on purchases and balance transfers for the first 15 months from account opening (and 16.74% to 25.49% variable APR for purchases and balance transfers afterward).

This card also has no balance transfer fees for transfers made within 60 days of opening an account. After that, you’ll pay a 5% or $5 minimum fee on any additional transfers.

When choosing a balance transfer card, check the APR, promotional period (how long the low APR lasts) and any fees.

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3. Read the fine print and understand the terms and conditions.

Before you go through with a balance transfer, a word of warning: It’s crucial that you read the fine print and the terms and conditions.

Many balance transfer cards have balance transfer fees, typically between 3% and 5% of the amount transferred, which is charged for every balance transfer.

“You need to make sure that the transfer is financially beneficial,” says Roslyn Lash, AFC®, financial educator and coach at Youth Smart Financial Education Services.

“For example, if the fee is 3% of the balance and the new APR is 10%, you won’t benefit from the transfer if the APR on your old card is 11%,” Lash says.

If the balance transfer card of your choice has a balance transfer fee, calculate how much it will cost to make the transfer, how much you may save on interest, and see if it makes sense for your situation.

Additionally, check whether the bank sets limitations, such as:

  • How long the low intro APR will last. Many cards offer a 0% intro APR on balance transfers for nine to 21 months.
  • Any restrictions with certain cards. For example, if you want to transfer a balance to a Citi Simplicity® Card , you can’t transfer balances from any Citibank® cards you already have.
  • Credit limits. It’s important to note that credit limits are based on the issuer’s assessment of your credit and other factors. Depending on your situation, you may not be approved for a limit that will cover the balance you wish to transfer. Some issuers also only permit a maximum balance transfer. For example, Chase permits a maximum transfer of your credit limit or $15,000 (whichever is lower) within any 30-day period.
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4. Apply for a balance transfer card.

Once you’ve chosen the right balance transfer card for you, go ahead and apply for the card.

You can typically apply for credit cards online. If you have a Credit Karma account, you can check your Approval Odds for the card you’re interested in.

Once you’ve filled out your pertinent information, submit the application and wait. If you receive a confirmation that you’ve been approved for the balance transfer card, then you can take the next steps to transfer the balance.

5. Contact the new credit card company to do the balance transfer.

The best way to transfer a credit card balance is by contacting the new credit card company with the balance transfer request. Typically, you can do a balance transfer over the phone or online.

“You’ll need to provide your new credit card company with the account numbers of your old cards and tell them how much of your balance you want to transfer,” Freeman says.

According to Discover, it typically takes between seven and 10 days to process a balance transfer so it’s important to still make payments on your old card until you get a confirmation the transfer has gone through. The last thing you want is to add any late payment fees to your debt load.

6. Pay off your debt.

After your balance transfers are approved and go through, your transferred balance will be on the new balance transfer card. If you’re able to transfer your entire balance, your balances on the old cards will be wiped clean.

However, if you couldn’t transfer all your debt, remember that you still need to make at least minimum payments on your remaining cards.

To pay off debt faster, start making payments on the balance transfer card. Freeman says it’s essential to make all your payments on time: “Sometimes, even if you’re late just once, it could mean an early end to your low introductory rate,” Freeman says.

Make a plan to pay off your balance — or at least most of it — within the introductory period when your APR is the lowest.

That way you can save money on interest, pay off debt faster and utilize a balance transfer to your advantage.

How does a balance transfer work?

A balance transfer allows you to take a high-interest credit card balance (or even multiple balances) and transfer it to a new credit card with a lower interest rate. Some balance transfer cards offer 0% intro APR for balance transfers for a limited amount of time.

If you transfer balances from multiple credit cards to one balance transfer card, this can streamline your payments into one, easier-to-manage payment.

Matt Freeman, head of credit card products at Navy Federal Credit Union, says this can be helpful because “this new lower rate helps to reduce your level of debt because more of your monthly payment will go toward paying off the debt, [or principal balance] rather than the interest on the debt.”

While balance transfers can be helpful in the debt payoff process, they’re not a magic solution. You must commit to getting out of debt for it to be a successful move — or risk ending up in even more debt.

Bottom line

By getting a balance transfer card, you can start fresh with a lower APR and get ahead on paying off your debt.

However, a balance transfer can be a double-edged sword if you’re not careful. Remember to read all the fine print, and be sure to choose a card with terms that will set you up for success. You want to be sure that you are committing to paying off debt — and not getting into more of it.