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What Are Credit Card Balance Transfers?

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A balance transfer is the process of moving over a balance from one credit card to another. The topic sounds much simpler than it actually is, and there are a lot of fine details surrounding it. If you have outstanding credit card debt, a balance transfer can be a good way of saving money from interest charges. How much you can save depends on a number of factors, such as which card you transfer your balance to, and when you choose to transfer. We’ve compiled this guide to help consumers better understand everything that falls under the umbrella of balance transfers. The three areas are:

How Do Balance Transfers Work?

Balance transfers save you money by moving a credit card balance to an account with a lower interest rate – ideally 0% APR. In most cases, you will want to move over your balance to what’s called a Balance Transfer Credit Card. These special types of cards are designed for taking on a balance, and providing additional time to pay them off. Most tend to have 0% APR on balance transfers for a certain period of time. The duration of the 0% interest period, and associated fees differ from card to card, which makes it worthwhile for consumers to shop around.

How much of an impact can transferring your balance have? The table below shows the estimated interest cost with minimum payments on $15,000 in debt for credit cards with various APRs. We calculate the net savings from transferring to a 0% APR credit card to be the original card's interest less the one-time 3% balance transfer fee.

Different Credit Card APRs6-Month Interest CostNet Savings with Balance Transfer
10.99%$791$341
12.99%$939$489
14.99%$1,088$638
16.99%$1,238$788
18.99%$1,389$939
20.99%$1,542$1,092
22.99%$1,696$1,246

Balance transfers aren’t free – on average, we see transfer fees of 3%. For this reason, you won't be seeing net savings on interest of 100% - your savings will always be offset by the balance transfer fee. As you can see in the table above, the higher your current APR, the greater your savings will be.

Before you transfer your balance, you should also have an idea of how long it will take you to pay it off. Balance transfer credit cards will offer different 0% APR periods, and you'll want to remain in this interest-free zone for as long as possible. The recent trend has been favorable to consumers who need more time. Credit card issuers are offering longer 0% APR periods than ever before - it is not uncommon to find 0% periods lasting 15 months or more.

When should you transfer a balance? Generally speaking, if you don't think you can pay down your balance completely within 3-4 months, you will generally be better off moving your balance despite the 3% fee. After those initial few months, the cost of the balance transfer will usually be less than the total amount paid in interest. If you're looking at a credit card with a 4% balance transfer fee, then you should consider transferring if you need more than 4-5 months to pay down the balance.

What is the maximum balance I can transfer? That depends on your new card's credit limit, but will always be less than it. If the card you are transferring your balance to has a credit limit of $5,000 and a balance transfer fee of 3%, you will be able to transfer at most $4,854. It's less than the stated limit because companies consider the transfer fee as part of your limit. So, for our earlier example, the balance will result in a transfer fee of $146 (3% of $4,854). If you want to easily calculate what kind of balance you can transfer for a given limit use the following calculation:

Maximum Allowable Transfer = Credit Limit / 1.03.

For a 4% transfer fee, divide by 1.04 instead. As you can see the pattern is to replace the hundredths place by the digit in your balance transfer fee.

How do You Transfer a Balance?

When you get your balance transfer card, call the customer service line of the new company to begin transferring balances. Your account representative will talk you through the necessary steps for the transfer to occur. You will need the credit card number or account number where the debt is currently. Once you supply that, the balance (or whatever amount you specify) will be moved over to your new credit card.

Banks generally do not allow you to transfer a balance between their own cards. That means if you have accumulated a $4,000 balance with a Chase credit card, you will not be able to transfer it to another card from Chase. Most credit issuers make their money from interest charged to consumers. This rule exists so that consumers can’t dodge paying interest by switching between different 0% APR credit cards of one financial institution.

Below are some highlights of Citibank and Chase when it comes to balance transfers. These two issuers are by far the best choice for consumers, and feature prominently on our list of best balance transfer credit cards.

Chase Balance Transfer – The Chase Slate® is the premier balance transfer credit card offered by Chase. Chase is one of the only institutions to offer 0% balance transfer fee (only to Chase Slate® cardholders), making it a worthwhile consideration.

For anybody who is ready to transfer their credit card balance, below is a list of issuers and their customer service numbers.

IssuerCustomer Service Phone Number
American Express1-800-801-6564
Bank of America1-800-732-9194
Barclays1-302-255-8990
Capital One1-800-227-4825
Chase1-800-935-9935
Citi1-800-950-5114
Discover1-800-347-2683
Fidelity1-866-598-4971
US Bank1-800-285-8585
Wells Fargo1-800-642-4720

Things to Look Out for When Transferring a Balance

Everyone should be aware of some common rules and regulations for making a balance transfer. Knowing these can avoid headaches and save some money as well.

You have to transfer balances quickly: Most balance transfer credit cards will allow 0% APR only on balances which are transferred within a short period of time. Just because the card advertises a 18 month 0% APR period, doesn’t mean you can transfer a balance 8 months into having the card, and expect 0% APR.

The Chase Slate® is the only card on the list to offer an introductory offer on the balance transfer fee. The catch to this deal, however, is that you must complete the balance transfer within 60 days of your account opening to qualify for the transfer fee waiver. Transfers after the 60 days will cost you $5 or 5% fee (whichever of the two is greater), but will continue to have 0% APR for another 13 billing cycles. Since it allows users to get around the transfer fee, the Chase Slate® is one of our favorite credit cards for balance transfers.

In general, if you want to find out these facts about a credit card not listed above, look for “APR for Balance Transfers” under the Interest Rates and Interest Charges section of the Terms and Conditions. The cost for a balance transfer will often be listed under the Transaction Fees section. Simply scan the document for the term “balance transfer” to find all important pieces of information. You can see a sample document below, with the highlighted sections.

Disclosure of Credit Card Terms

This is an excerpt of the terms and conditions for a balance transfer credit card with the APR and fees highlighted

Ask about your minimum payment. Make sure you find out what your minimum payments will be before you settle on a credit card to transfer your balance to. You should not assume that a balance transfer card will calculate the minimum amount due the same way your old card did. Banks have many different ways of calculating your minimum payment that can range between 2% and 5% of your total balance.

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