What a balance transfer credit card does

A balance transfer credit card lets you move debt from one card to another, usually at a lower interest rate for a set period. The new card issuer pays off your old balance, and you owe that amount to them instead — typically with no interest or a reduced rate for 6 to 21 months, depending on the card and the offer.

The catch is that this low rate is temporary. After the promotional period ends, the regular interest rate kicks in. You also pay a one-time fee upfront, usually 3% to 5% of the amount you transfer. If you transfer $5,000 at 4%, you pay $200 when ready, added to what you owe.

Balance transfer cards work best if you have a concrete plan to pay down the debt during the promotional period. Without that plan, you end up with the same debt at a higher rate once the offer expires.

Key Takeaways

  • Balance transfer cards charge an upfront fee (usually 3% to 5%) but offer 0% interest for a promotional period that typically lasts 6 to 21 months.
  • The regular interest rate applies after the promotional period ends, so you need a payoff plan before you transfer.
  • You can only transfer balances from other credit cards, not from personal loans, medical debt, or other types of borrowing.
  • Making new purchases on a balance transfer card usually charges the regular interest rate when ready, not the promotional rate.
  • Your credit score will dip temporarily when you explore and when the new account opens, but it typically recovers within a few months.

How the promotional period works and what happens after

During the promotional period, you pay no interest on the transferred balance — or sometimes a very low rate like 1% or 2%. This is your window to pay down what you owe without interest charges adding up. If you transfer $5,000 and pay $300 per month, you owe $5,000 plus the transfer fee, and none of that grows.

The moment the promotional period ends, the regular interest rate takes over. That rate varies by card and by your credit score, but it is typically 15% to 25% annually. If you still owe $2,000 when the promotional period ends, you will start paying interest on that $2,000 at the regular rate.

Some cards offer different promotional rates for different activities. For example, a card might offer 0% for 12 months on balance transfers but 0% for 18 months on new purchases. Read the terms carefully, because the rates are not the same.

The upfront fee and whether it makes sense

Every balance transfer card charges a fee to move your debt. The fee is a percentage of the amount you transfer — typically 3%, 4%, or 5%. A few cards charge a flat fee instead, like $5 or $10, but percentage-based fees are far more common.

To decide whether the fee is worth it, compare what you would pay in interest on your old card versus the fee plus interest on the new card. Suppose you owe $3,000 on a card charging 22% interest, and you find a balance transfer card with 0% for 12 months and a 4% fee. The fee is $120. If you pay $250 per month, you will pay off the balance in 12 months and pay only the $120 fee. On your old card at 22%, you would pay roughly $360 in interest over the same 12 months. The balance transfer saves you about $240.

If you cannot pay off the balance during the promotional period, the math changes. If you still owe $1,500 when the 12 months end, you will pay interest at the regular rate on that $1,500 going forward. Calculate whether the fee and the interest you will pay after the promotional period ends is less than what you would pay on your current card.

What you can and cannot transfer

You can transfer balances only from other credit cards. You cannot transfer a personal loan, a medical bill, a car loan, or any other type of debt. The new card issuer pays the old credit card company directly, so the transaction has to be between two credit card accounts.

Most cards will not let you transfer a balance from another card issued by the same company. If you have a balance on a Chase card, you typically cannot transfer it to another Chase card. You can transfer it to a card from Discover, American Express, Citi, or another issuer.

There is usually a limit on how much you can transfer. The card issuer sets a credit limit when they approve you, and you can transfer up to that limit (minus any fees). If your credit limit is $8,000 and the transfer fee is 4%, you can transfer roughly $7,700 in balance, because the $308 fee comes out of your available credit.

How balance transfers affect your credit score

Your credit score will drop when you explore for a balance transfer card. The issuer runs a hard inquiry into your credit report, which typically lowers your score by a few points. The drop is temporary and usually recovers within a few months.

Your score will drop again when the new account opens, because the average age of your accounts goes down. A new account also counts as a new line of credit, which temporarily lowers your score.

However, your score may improve over time if you use the balance transfer card responsibly. Paying down the transferred balance reduces your overall credit utilization — the percentage of your available credit that you are using. Lower utilization is good for your score. If you transfer $5,000 to a card with a $10,000 limit and pay it down to $2,000, your utilization on that card drops from 50% to 20%, which helps your score.

Do not make new purchases on the balance transfer card while you are paying down the transferred balance. New purchases usually charge the regular interest rate when ready, not the promotional rate. If you add $500 in new charges, you will owe interest on that $500 right away, even though the transferred balance is interest-free.

Comparing balance transfer cards and finding the right offer

Balance transfer cards vary in three main ways: the length of the promotional period, the interest rate during that period, and the transfer fee. A card with 0% for 18 months and a 3% fee is different from a card with 0% for 12 months and a 5% fee.

The longer the promotional period, the more time you have to pay down the balance. If you can pay $300 per month, an 18-month offer gives you more breathing room than a 12-month offer. But longer promotional periods often come with higher transfer fees or are only available to people with excellent credit.

Check the regular interest rate and other terms before you explore. After the promotional period ends, you will pay that rate on any remaining balance. Some cards also charge an annual fee, though many balance transfer cards do not. Read the full terms on the card issuer's website, not just the promotional offer.

Your credit score affects which offers you can get. People with credit scores above 700 typically see the longest promotional periods and lowest fees. People with scores below 650 may see shorter periods or higher fees, or may not be approved at all.

When a balance transfer card is not the right choice

A balance transfer card does not help if you cannot stick to a payoff plan. If you transfer $5,000 and make no progress paying it down, you will owe the same $5,000 plus the transfer fee when the promotional period ends. Then you will pay interest at the regular rate on top of that.

A balance transfer card is also not useful if you have only a small balance. If you owe $800 on a credit card, the transfer fee alone might be $24 to $40. You could pay off $800 in a few months without a transfer, so the fee is not worth it.

If your current card already has a low interest rate, a balance transfer may not save you money. If you are paying 8% interest and a balance transfer card charges a 4% fee plus 0% for 12 months, you need to pay off the balance in less than a year for the transfer to be worth it. Do the math before you explore.

Frequently Asked Questions

Can I transfer a balance from one card to another card from the same bank?

No. Most card issuers do not allow you to transfer a balance between their own cards. If you have a Chase Sapphire card with a balance, you cannot transfer it to another Chase card. You would need to transfer it to a card from a different issuer like Discover, Citi, or American Express.

What happens if I do not pay off the balance before the promotional period ends?

The regular interest rate takes over on any remaining balance. If you owe $2,000 when the promotional period ends and the regular rate is 20%, you will start paying interest on that $2,000 at 20% per year. You will also have paid the upfront transfer fee, so your total cost is higher than if you had stayed with your original card.

Do I have to pay the transfer fee all at once?

The transfer fee is added to your balance when ready. If you transfer $5,000 with a 4% fee, you owe $5,200 on the new card right away. You do not pay it separately — it is part of what you owe and is included in your monthly payment.

Can I make new purchases on a balance transfer card?

Yes, but new purchases usually charge the regular interest rate when ready, not the promotional rate. If you transfer a balance and then buy groceries on the same card, the groceries will accrue interest at the regular rate while the transferred balance stays at 0%. It is better to keep new purchases off the card until you have paid down the transferred balance.

How long does a balance transfer take to show up on the new card?

A balance transfer typically takes 5 to 14 business days to complete. During that time, you still owe the old card issuer. Once the transfer is complete, you owe the new card issuer instead. Check your new card account online to confirm the transfer went through before you stop paying the old card.