How to Do a Credit Card Balance Transfer

Credit cards have plenty of perks, including cashback, rewards, and other cardholder benefits. One perk that can come in handy when paying off debt or considering debt consolidation is the credit card balance transfer. 

There is some murkiness surrounding credit card balance transfers, but we'll help clear things up by explaining how to transfer a credit card balance. We'll also outline the pros and cons of these transfers so you can make an informed decision.

What is a Credit Card Balance Transfer?

A credit card balance transfer pays off or pays down one credit card balance by transferring the amount onto a different card. While this may seem like a counterproductive idea due to the 3-5% balance transfer fee most credit cards charge, there are sometimes good reasons for initiating a transfer. 

One benefit is an introductory APR (annual percentage rate) for transferring a balance. These intro APRs can be as low as 0%, allowing you to pay down credit card debt with a lower interest rate or no interest at all. Some of the best balance transfer credit cards also offer this low APR for up to 18 months, so you may also lower your monthly payments and free up cash flow during the introductory period. 

How Can You Complete a Credit Card Balance Transfer?

Credit card balance transfers can save you money on interest charges, but the process isn't always simple. Here's how to transfer a credit card balance via check, online, or by phone. 

Transferring a credit card balance via check

Some balance transfer credit cards will send you a balance transfer offer in the mail. In many cases, the credit card company will include a handful of checks you can use to complete the transfer or make a new purchase and still get the 0% APR offer. 

Here's how to complete this process:

1. Fill out the "Pay to the order of" line on the check with the name of the

   credit card company you're paying. You can find this on your monthly statement.

2. Write the numerical amount you wish to pay in the "Amount" block on the right side of the check.

3. Write out the amount you wish to pay on the line below to the "Amount" block and "Pay to the order of" line. For example, if you were paying $1,000, you'd write "One-thousand and 00/100" on that line.

4. Sign the check on the line in the lower right-hand corner.

5. Remove the payment stub from the credit card you're paying and fill it out accordingly.

6. Place the payment stub and completed check in the envelope included with your monthly statement.

7. Verify you can read the mailing address through the envelope’s window. 

8. Complete the return address area of the envelope with your mailing address.

9. Apply the correct postage to the envelope and place it in the mail.

10. Check both credit card accounts — the one you're paying and the one you're transferring the balance to — over the next week or so to ensure the payment and

    transferred balance post, and you get the correct financing terms.

Transferring a credit card balance online

With many credit cards, you can skip all that writing and do your balance transfer 100% online. Here's how it works: 

1. Navigate to your credit card's website and log in to your account.

2. Find and click the balance transfer option. You may find this under "Account Services," "Promotions," or a similar section.

3. Activate the balance transfer deal your credit card is offering if needed.

4. Enter the information from the credit card you'd like to pay off. This will likely include your credit card number, which may also be referred to as the "

   account number," expiration date, billing address, and the amount you'd like to transfer.

5. Click the "Submit" button or a similar button.

6. Read any terms and conditions that pop up and accept them if you agree. 

7. Check both credit card accounts — the one you're paying and the one you're transferring the balance to — over the next week or so to ensure the payment posts and you get the correct financing terms.

Transferring a credit card balance via phone

If going online to do a transfer isn't your thing, some credit card companies will allow you to complete your balance transfer via telephone. Here's how: 

1. Call the customer service phone number on the back of the credit card you'd like to transfer your balance to.

2. Tell the customer service representative you'd like to do a balance transfer. If you received a mailer with a promotional APR, let the customer service rep know to apply the promotion.

3. Give the customer service representative all the information they request. This information will likely include the credit card number for the card you'd like to pay, the billing address, and the amount you'd like to pay.

4. Wait as the customer service rep processes your request and confirms its completion.

5. Check both credit card accounts — the one you're paying and the one you're transferring the balance to — over the next week or so to ensure the payment posts and you get the correct financing terms.

Pros of Using a Balance Transfer to Pay Down Credit Card Debt

There are several reasons to use a credit card balance transfer, but one of the key reasons is paying down or paying off debt. When using it in this way, there are multiple benefits. 

Reduced interest charges

As of May 26, 2021, the average credit card interest rate is 16.09%. If you have $2,000 in credit card debt on a card with this rate and a 3% minimum payment, or $60 per month, you will pay $668 in interest fees over the 45 months it'd take to pay off.  

If you transferred that $2,000 to a 0% balance transfer card with a 5% balance transfer fee, that'd bring your new balance to $2,100. If this card offered 0% APR for 18 months, you could pay just $116.67 per month and pay it off within the promotional period, saving you $558 in interest charges. 

Alternatively, suppose you chose to continue paying the original minimum payment of $60 per month to the balance transfer card. In that case, you'd cut your debt down to just $1,020 at the end of the promotional period — interest-free. 

Increased cash flow

Some credit cards calculate their minimum monthly payments using the accumulated interest from that billing cycle. For example, a minimum payment can be 1% of the total balance plus any accrued interest from the billing cycle. 

In this case, transferring to a 0% balance transfer credit card will eliminate that interest factor during the promotional period, reducing your monthly payment. You can then use that extra cash flow to pay down other high-interest debts.

Structured terms

Structure can make paying off debt significantly easier, and interest rates tend to muddy up structure because they often have variable APRs that change periodically. With a 0% balance transfer, simple math — your balance divided by the number of months in the promotion — shows you know exactly how much you need to pay each month during the promotional APR period to pay off the debt.

Decreased credit utilization

Credit utilization — the total amount charged on a credit card relative to its credit limit — is an important factor in your FICO credit score. If you open a new credit card account to get an intro APR offer, you will likely increase your available credit, thereby reducing your credit utilization ratio. This might improve your credit score slightly. 

Consolidated debt

In most cases, credit card issuers don't limit the number of credit card balances you can transfer. So, if you have several low-balance credit cards and are tired of making multiple minimum monthly payments, you can transfer them all onto one credit card. Plus, you can take advantage of the lower APR.

Cons of Using a Balance Transfer to Pay Down Credit Card Debt

There are plenty of benefits to using a balance transfer to pay down credit card debt, but there are also a few downsides to it. 

You may pay a fee

The 0% introductory rate is great — even if it's 1-2%, it's still a good offer — but watch out for that balance transfer fee. It may be only 3-5%, but it can add up quickly. Plus, if you're transferring a small balance that you could easily pay off well before the intro offer expires, the fee could end up costing more than the interest on your normal credit card. 

You could get stuck with deferred interest

While it's not overly common, a balance transfer card can offer deferred interest instead of true 0% intro APR. Deferred interest means the account still accumulates interest at its normal APR, but the credit card company withholds the interest for a set number of months. 

If you pay off the balance within the promotional period, you pay no interest at all. If you have a balance after the promotion period ends, the credit card issuer will immediately apply all the accumulated interest to your account, negating all its benefits.

Your credit score could decrease

While the balance transfer itself shouldn't impact your credit score, opening a new account to get an introductory balance transfer deal could. 

First, the hard credit inquiry when you complete the credit card application could drop your FICO credit score a few points. Plus, your average length of credit history will shorten due to the new credit card account on your credit report, which can also lower your credit score slightly. 

Your credit limit might be too low

If your credit limit on the balance transfer card is lower than the transfer amount, it could cause headaches. 

For example, imagine your balance transfer card has a $2,000 limit and a 5% transfer fee. If your highest-interest credit card has a $5,000 balance, you have enough available credit to transfer only about $1,905 (transfer fee included) from the old card to the balance transfer card. 

This leaves you with a $3,095 balance on your old credit card. At this point, you're now making two credit card payments and still paying high interest on the $3,095 balance. 

Your interest savings could be derailed with a late payment

If you miss a due date and make a late payment, not only will you likely get a late fee, but the credit card issuer may also void the introductory APR offer and set your account back to the regular APR.

You may not qualify

Often the best balance transfer credit cards require at least a good credit score, and some even require excellent credit. This can make getting these offers difficult. You may want to check your credit history and credit score before applying so you know what you’re eligible for. 

How to Transfer a Credit Card Balance Made Easy

Credit card balance transfers may seem like a mystery, but there are actually three relatively simple ways to do it: via mail, online, or over the phone. No matter which process works for you, these balance transfers can sometimes net you great APR offers — even 0% interest for up to 18 months. 

Though they are helpful and may get out of debt quicker, balance transfers aren't without their downsides. Some of these issues include credit qualification, the balance transfer fee, tricky terms, and more. With the right information and  attention to detail, you can get a balance transfer card that works for you and helps you save on interest. 

If you run into qualification issues, a Tally line of credit1 may help. Tally’s line of credit offers you a credit line with a lower interest rate than most credit cards. You can then use this credit line to pay off one or more high-interest credit cards. Plus, Tally will manage all your credit card payments for you, leaving you to make just one simple monthly payment for all your cards. 

1To get the benefits of a Tally line of credit, you must qualify for and accept a Tally line of credit. The APR (which is the same as your interest rate) Will be between 7.90% - 29.99% per year, and will be based on your credit history. The APR will vary with the market based on the Prime Rate.