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What Is a Balance Transfer, and How Can It Save You Money?

A balance transfer lets you move debt from one account to another. Why do one? Because moving high-interest debt to a credit card with 0% APR can be a big money-saver.

Key takeaways

  • A balance transfer can be a good idea to save money on interest charges.
  • Balance transfers work by applying for a new card with a low introductory APR, initiating a balance transfer and paying down the balance.
  • Some cards are good for balance transfers but some are not.

A balance transfer is a type of credit card transaction in which debt is moved from one account to another. For those paying down high-interest debt, such a move can save serious money on interest charges if done strategically. For example, debt that’s moved to a credit card with a 0% introductory APR offer on balance transfers could potentially be paid off interest-free.

Balance transfers come with certain costs and limitations, though. Generally, you’ll have to pay a balance transfer fee — usually 3% to 5% of the total transferred. And if your balance transfer card’s limit is low, you might not be able to transfer your full balance.

How balance transfers work

While the exact process for balance transfers can vary widely, here are the steps you generally have to take when working with major issuers:

1. Apply for a card with an introductory 0% APR offer on balance transfers or use an offer on a card you already have. Something to keep in mind: Same-issuer transfers generally aren’t allowed.

2. Initiate the balance transfer. If you’re doing this online or by phone, you’ll need to provide information about the debt you’re looking to move, such as the issuer name, the amount of debt and the account information.

3. Wait for the transfer to go through. Once the balance transfer is approved, which could take two weeks or longer, the issuer will generally pay off your old account directly. That old balance — plus the balance transfer fee — will show up in your new account.

4. Pay down the balance. When that balance is added to the new card, you’ll be responsible for making monthly payments on that account. And if you pay it down during the introductory 0% APR period, for example, you could potentially save a bundle.

Pro tip: Credit card debt isn’t the only type of debt you can transfer. Many issuers also allow cardholders to move other types of debt — such as auto loans or personal loans — to a credit card or consolidation loan.

Good balance transfer cards

The goal of a balance transfer is saving money, so you want to choose a card that helps you minimize your costs. The ideal balance transfer credit card comes with three big zeroes:

  • A 0% introductory APR offer for balance transfers.
  • A $0 annual fee.
  • A $0 balance transfer fee (or a way to avoid paying such a fee).

With such a card, you could potentially pay off your debt without spending a penny on interest and fees. Cards without transfer fees are rare nowadays, however, so you’re likely to find only two out of three. Still, a card with no annual fee and a 0% introductory offer on balance transfers is quite valuable. Interest charges add up quickly and are often far more costly than a one-time 3% to 5% fee.

An important note: Some 0% APR offers apply only to purchases. To save money when moving over debt, you’ll need one with an introductory 0% APR promotion on balance transfers. Make sure the card you apply for offers this.

Should I do a balance transfer?

If you can manage to pay off a balance in three months or sooner, or you can’t qualify for a good 0% APR offer, paying off your debt as quickly as possible might be the best, most cost-effective option. And if you want a higher limit and don’t mind paying some interest, a personal loan could be a good match; you can pre-qualify for one to see how much you could borrow and what interest rate you could get before accepting an offer.

But in general, a balance transfer is the most valuable choice if you need months to pay off high-interest debt and have good enough credit to qualify for a card with a 0% introductory APR on balance transfers. Such a card could save you plenty on interest, giving you an edge when paying off your balances.

If you’re stuck trying to weigh your options, talk to Member Services for customized debt solutions and current balance transfer specials.

*APR=Annual Percentage Rate. Rates, terms, and conditions may vary based on creditworthiness and qualifications and are subject to change. Cash advance fee 3% of the transferred amount or $5.00, whichever is greater. Foreign  transaction fee is 1.25% of each transaction in U.S. dollars. Refer to your Mastercard® agreement for complete details. Applicants under 21 years of age must show proof of independent means of repaying the card or have an approved cosigner over 21 years of age.

** Special Offer: The balance transfer fee of 3% of the transferred amount or $5.00, whichever is greater, will be waived from Feb. 1, 2022 – March 31, 2022 on consumer credit card balance transfers only. West Community Credit Union Executive Business Mastercards® are excluded. Offer not valid on balances of existing West Community Credit Card accounts. Special offer not eligible for CURewards points. Certain restrictions may apply.