How to Do a Balance Transfer in 5 Steps

Photo to accompany a story about balance transfer tools. Getty Images

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During a moment of mounting financial anxiety for many of us, one of the best debt management tools has suddenly become scarce. 

Where have all the balance transfer deals gone? 

Credit card issuers including Chase and American Express have scaled back or completely eliminated the opportunities that make balance transfer cards helpful for paying off debt, like zero-interest introductory periods.

“Balance transfer cards are a great way to save money, but they’ve become a lot harder to get these days,” says Ted Rossman, an industry analyst at CreditCards.com.

Lenders are being pickier about who they make these offers to, Rossman says, showing preference for customers with higher credit scores and other qualifications, such as steady income and a low credit utilization ratio. 

But if you can get your hands on a balance transfer card, it can be part of a smart debt payoff strategy. “Balance transfers can be a huge way to save on interest,” Rossman says. “The average credit card rate is 16%. But many people are paying even more, sometimes even 30%.” 

If you need months to pay off high-interest debt and have good enough credit to qualify, here’s how to do a balance transfer, in five steps:

1. See if a Balance Transfer Makes Sense for You

Review your current financial situation before making any major decisions. If you’re considering a balance transfer card, go over your current credit card balances and interest rates first. It’ll help you determine what’s the appropriate amount to transfer to another credit card.

Before you apply, you’ll want to take a hard look at your debts and finances to figure out how long of a balance transfer introductory period you’ll need for repayment. 

2. Make a Debt Payoff Plan

If the card you picked has a balance transfer fee, you should calculate how much it will cost to make the transfer and compare that figure to how much you may save on interest during the introductory period. By comparing the two, you’ll be able to see if applying for a balance transfer card actually saves you money. 

Then figure out how long of an introductory period you’ll need for repayment. Calculate your debt balance after transfer fees are added, and divide by the number of months of the introductory period. Can you contribute that amount to paying off your debt each month? The best way to use a 0% APR offer is to stick to a plan where you pay off your balance before the promotional offer expires. 

3. Research Balance Transfer Offers

Once you’ve figured out how much time you’ll need, you can start researching balance transfer offers and make a list of those that fit your needs. There are certain things to consider when comparing balance transfer cards such as:

  • Length of the introductory period
  • Balance transfer fee, which usually ranges from 2% to 5%.
  • APR that kicks in after the introductory period 
  • Any unusual limits or restrictions. For example, most banks don’t allow you to transfer balances between any cards you already have with them.
  • Any strict penalties. For example, some cards will end the introductory period and hike your interest rate if you make a late payment.

Pro Tip

Applying for just one credit card, let alone multiple, can temporarily lower your credit score. You should only apply for a balance transfer card if you believe your odds of getting approved are high. Your credit score should be at least above 700 before you consider applying for a balance transfer card. (Here’s how to check your credit score.)

4. Apply for a Balance Transfer Credit Card

Once you’ve done your research and figured out which balance transfer card is best for you, you can apply online. You’ll have to provide information on the application, such as your address, date of birth, and Social Security number. 

It’s a waiting game after you’ve submitted your application. Sometimes, it only takes a few days to hear a response back from an issuer. And sometimes, it can take a few weeks. If you’re rejected, don’t take it personally. Many banks are tightening their lending standards during the coronavirus pandemic. If you are approved for the balance transfer card, you can proceed with the next steps to transfer the balance. 

5. Request a Balance Transfer

Typically, you’ll have to contact your new credit card company to initiate a balance transfer request. You can make the request either over the phone or online. 

The new issuer will ask you for your account numbers from your previous cards and how much of your balance you’ll want to transfer. It could take several days or possibly weeks to complete the balance transfer request, so you should keep making payments on your old card until you get confirmation the transfer was successful. 

And act quickly—most cards will only give you a short window of time to make the transfer before interest kicks in again.