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What Is a Credit Card Balance Transfer?

Here’s a not-so-fun fact: The average credit card balance is $5,910.1 And with the average credit card interest rate now at a whopping 20.4%, people are forking over a ton of money every month—just in interest!2

With those kinds of numbers, it’s not surprising people are looking for ways to avoid paying the toll. And one of those ways is a balance transfer.

But what is a credit card balance transfer exactly? We’ll explain how balance transfers (and specifically balance transfer credit cards) work so you can know what those banks and credit card companies are actually trying to sell you.

Plus, we’ve got much better alternatives to help you take care of your credit card debt for good—not just sweep it under the rug.

What Is a Credit Card Balance Transfer?

A balance transfer (also called a credit card balance transfer) is when you take the debt balance from a credit card and transfer it to another credit card—usually one with a lower interest rate.

On the surface, balance transfers seem like a good idea. People who are struggling with credit card debt often use this method to consolidate their debt or save money on credit card interest by moving their debt to a new card. But to be clear, that’s the only thing balance transfers do—move your debt around.

While you can technically transfer your balance to any credit card, there are specific credit cards marketed to get people to transfer their credit card debt to a new card. These are called balance transfer credit cards.

What Is a Balance Transfer Credit Card?

A balance transfer credit card is a credit card that allows you to move debt from other credit cards or accounts to that card. Most balance transfer cards offer a 0% APR (aka interest rate) to make the move “worth it.”

A quick Google search will give you plenty of “the best balance transfer credit card options.” But all the sites pushing this kind of card are also getting a kickback from the credit card companies. They’re not trying to help you get rid of your debt—they’re just trying to sell you even more debt.

And guess what? That 0% APR is temporary. Once that introductory period is over (typically after 12 months or so), most of these cards end up charging you a variable interest rate ranging from 11% to 25%. Ouch! If you thought your previous interest rate hurt, wait till you have one that can shoot up without warning.

Oh, and don’t forget: That intro period doesn’t mean you get a break on making your minimum payment every single month. If you miss even one payment during that time, that 0% interest rate is gone for good.

Not only that, but the credit card company will also slam you with a 3–5% balance transfer fee on each transfer you make. Hold on, wasn’t the whole point of doing a balance transfer to keep your debt from growing? Yeah, but the credit card company has to make money off you somehow—and they have no problem “feeing” you to death if they can.

How Do Balance Transfers Work?

The process of doing a balance transfer isn’t super complicated. (After all, credit card companies want to make it easier to take your money.)

You apply for a balance transfer credit card just like you would any other credit card. But you usually can’t transfer balances between cards from the same issuer (for example, you can’t transfer from one American Express card to another American Express card). Also, you won’t be able to transfer your entire balance if it’s bigger than the new card’s credit limit.

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If approved, you would then request the balance transfer either online or over the phone, and the new credit card company would get all the info for the card you’re transferring from. (Sometimes you can do balance transfers through a check, but that can also come with some hidden fees if you don’t look over the fine print.)

Then you have to wait for the balance transfer to go through, which can take anywhere from a couple weeks to a whole month. And in the meantime, you still have to make sure you’re paying your minimum payment on your old credit card until the balance is officially transferred. Otherwise, it’s “so long, grace period” and “hello, interest.”

But by the time you’ve got your new account all set up, your balance is already bigger than what you started with—thanks to that lovely balance transfer fee.

What Kinds of Debt Can Be Transferred?

Most of the time, you can only transfer credit card debt to a new credit card. But some lenders will let you transfer other debt—like car loans, student loans or personal loans—onto a balance transfer credit card.Hear us loud and clear when we say this is a bad idea! Odds are, you won’t be able to transfer that much debt onto one card anyway (because you’ll probably exceed the credit limit). But even if you can, piling all your miscellaneous debt onto credit cards with an interest rate that will jack up before you can even think about paying it off—that’s just asking for trouble.

How Do You Qualify for a Balance Transfer Credit Card?

While it may seem like companies give out credit cards like candy, some cards have more requirements than others. And if you want to apply for a balance transfer credit card, you’re going to need a credit score of 670 or higher.3

Why? Well, if a credit card company is already taking a risk on you with that 0% APR, they want you to be good for the money. (All they see are dollar signs, remember?) And if you’ve got a history of not making payments, that’s not going to look too great.

But don’t waste another minute worrying about whether or not you qualify for a balance transfer credit card. There are better ways to handle your debt—without taking the risk of going into more debt.

Do Balance Transfers Hurt Your Credit?

It depends. Any time you sign up for a credit card, the card company will do what’s called a hard inquiry on your credit to see if they really want to loan you money. This will put a small ding in your credit score at first, but it usually bounces back after a short period of time. So, if you actually did sign up for a balance transfer credit card, your score would drop a few points.  

But listen: You don’t have to keep playing the exhausting game of trying to build up your credit score. A FICO score is just an “I love debt” score. All it does is keep you borrowing money so companies can find you “worthy” enough to borrow even more money. That, my friend, is how you stay in debt. So, forget chasing after some meaningless number. You don’t need a credit score to live life on your terms.

Should I Do a Balance Transfer?

Absolutely not.

Look, we know just how overwhelming credit card debt can be. The sleepless nights. The constant sense of dread and anxiety hanging over you. And if you’re living paycheck to paycheck, it may seem impossible to ever get on top of it.

But transferring a balance from one credit card to another won’t get rid of your debt. At best, it’s like placing a band-aid over a hole on a sinking ship. And at worst, it keeps you in debt even longer. Balance transfers give you a false sense of security because you’ll feel like you’ve taken care of the problem—when in reality, you’ve only drawn out the amount of time you’ll be making payments.

Plus, that introductory offer of 0% APR is only there for a short time. When it’s over, you’ll be dealing with a variable interest rate—and that could make your problem way worse fast.

How Do Companies Make Money From Credit Card Balance Transfers?

Credit card companies have one goal and one goal only: to keep you in the cycle of debt. That’s probably giving them a little too much credit. They’re actually not thinking about you at all, because when they see you, they just see how much money they can make.

Have you ever wondered why you get credit card rewards for using their money instead of your own? It’s so they can keep you spending more. Plus, if you’re the forgetful type (and let’s be honest, most of us are), they’ll make even more money off your missed payments in interest and late fees.

So, if credit card companies are charging you 0% interest for a balance transfer (at least at first), how are they making any money? (Because you know they wouldn’t be shoving these cards in your face if it didn’t put money in their very large pockets.)

1. Balance Transfer Fees

Despite how they’re marketed, balance transfers aren’t really free. Credit card companies charge you a fee of anywhere between 3–5% of the amount you want to transfer. And while some lenders will wave this fee for the first transfer, they’re banking on you not being able to pay off your balance so they can collect that money back in interest.

2. Penalty Fees

Just because your credit card won’t charge you interest, it doesn’t mean you get out of paying your minimum monthly payment. If you miss a payment during the card’s promotional period, you could lose your introductory 0% rate and get slapped with a penalty fee plus a new penalty APR.

And penalty APR is often double the normal interest rate (or up to almost 30%), and it stays with you for at least six months. The only silver lining in all this is that the credit card company has to notify you 45 days in advance before they penalize you (you can thank the CARD Act for that).

3. Post-Promotional Interest Rates

All good things must come to an end eventually (if you can call zero interest on debt good). So, once your card’s promotional period ends, you could be looking at a brand-new variable interest rate—in the ballpark of 11–25%. Why variable? Because the credit card company can make more money that way, of course.

Alternatives to Credit Card Balance Transfers

So, now you know all the cons of balance transfers. But what are you supposed to do about your balance? Good question! You can actually tackle your credit card debt without having to open up multiple credit card accounts. Here’s how you do it.

Stop using credit cards.

Here’s the deal: You can’t get rid of your debt until you stop the cycle of borrowing. If you don’t use your credit card, you can’t add to your credit card balance. Makes sense, right? But to do that, you’ve got to cancel your credit cards and start living within your means. In other words, if you can’t afford it, you can’t have it. Harsh, we know. But that’s the only way you’re going to nip this credit card issue in the bud.

So, trade in your credit cards for a debit card and pay cash. And yes, you can do everything you need to do without a credit card holding you back!

Get on a budget.

If you’ve been relying on credit cards to get by, you need a way to keep track of your spending in real time. And the best way to do that is with a budget. When you tell your money where to go before the month begins, you’ll be able to pay the bills and know exactly how much you can throw at your credit card debt. Go ahead and set up your free budget with EveryDollar. Simply having a plan for the month ahead gives you so much control and peace!

Get serious about paying off your debt.

You can’t be passive about your debt and expect it to just go away. And that’s exactly what balance transfers are—passive. The only way to free up your money and get back on your feet is to make a serious change. You need to get angry at your debt! Trust us, money management is more about your mindset than math. Decide right here and now that you’re tired of debt stealing from you and that you’re willing to do whatever it takes to get it out of your life!

Use the debt snowball method.

The debt snowball method is the best way to pay off your debt. It’s worked for millions of families all across America, and if you stick to it, it can work for you too.

Here’s how you do it: List all your debts from smallest to largest, no matter the interest rate. (Balance transfers are all about chasing the lowest interest rate, but that’s not what gets you out of debt.) Pay minimum payments on everything but the smallest debt. Use any extra money you can squeeze from the budget to throw at the smallest debt.

Once that smallest balance is paid off, you’ll take the minimum payment from that debt and add it to the payment on the next-smallest debt. Keep going, and you’ll be amazed how quickly you can get out of debt with that giant snowball!

Get Rid of Credit Card Debt for Good

When it comes to getting out of credit card debt (or any debt), there’s only one real way to do it: Pay. It. Off. No amount of balance transfers or other tricks will actually take care of your debt. They will only keep you in debt longer and paying more each month.

Instead of trying to outsmart the credit card companies, what you really need is a plan for your money—one that doesn’t involve moving your debt from card to card.

In Financial Peace University (FPU), you'll learn how to get ahead—instead of just getting by. This course teaches you the step-by-step plan to pay off all your debt, save more money, and make better decisions for your financial future.

And the average household pays off $5,300 in the first 90 days of following this plan. That could help you knock out your credit card debt way sooner than you thought!

This is a plan that actually works if you follow it. Start FPU today and ditch credit card debt—once and for all.

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Ramsey Solutions

About the author


Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.

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