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.
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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 others are not.
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. To qualify for the best offers, you generally have to have good or excellent credit (typically, FICO scores of at least 690).
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.
