Balance transfers are the financial equivalent of a game of Jenga — it’s about carefully moving things around without bringing the whole tower down. Balance transfers can be a great way to consolidate debt, simplify your payments, and save on interest. But credit card balance transfers can be tricky business if you don’t know what you’re doing. To help ensure you don’t incur any unnecessary fees, here’s a quick crash course on how to transfer a credit card balance. Keep reading to see how you can get personalized offers from our trusted partners through MoneyLion!
Benefits of credit card balance transfer
A balance transfer can be like a superhero swooping in to save the day — or your wallet, in this case. By transferring your high-interest credit card debt to a card with a lower interest rate, you can save money on interest charges and you may have an easier time paying off your debt. It may feel like a weight has been lifted off your shoulders.
Plus, with a lower interest rate, more of your payments may be able to go toward paying off the principal balance, so you can say goodbye to those never-ending interest charges. And let’s not forget about the peace of mind that comes with having only one payment to worry about each month.
Some balance transfer cards also offer rewards, like cashback or points for travel, so you can enjoy rewards while you save.
Important considerations for credit card balance transfers
While balance transfers can be a great tool for managing credit card debt, it’s important to keep a few things in mind before making any moves.
Check the balance transfer fees
Many credit card issuers charge a fee for balance transfers, typically around 3% to 5% of the amount transferred. While a balance transfer can still save you money in interest charges, make sure to factor in the fee when comparing your options.
Review the terms and conditions
Reading the terms and conditions of any financial agreement isn’t exciting, but it’s very important. You’ll want to go over the fine print for balance transfers with a fine-toothed comb to make sure you understand all the fees, penalties, and other details of your balance transfer credit card.
Pay special attention to things like balance transfer fees (which can be a percentage of the amount transferred), annual fees, and any other fees that might apply. You’ll also want to make sure you understand the grace period, which is the amount of time you have to pay off your balance before interest starts accruing.
Be aware of the interest rates
When it comes to interest rates, you’ll want to be on your A-game. Make sure you fully grasp the interest rate for your balance transfer credit card, as well as any other interest rates that might apply, such as for cash advances or if you pay late.
The prominent reason for doing a balance transfer is to cut down on those pesky interest charges. So, it’s crucial that you get a good deal on the interest rate. If the rate is too high, you could end up shelling out more than you would have if you had just stuck with your original card.
3 steps to transfer credit card balance
Now that you know the benefits and important considerations of a balance transfer, let’s get into the steps you need to take to transfer your credit card balance.
1. Compare balance transfer credit card offers
The first step in transferring your credit card balance is to do some research. Start by making a list of all your credit cards and the balances due on each one. Then, take a look at your options for transferring those balances. What cards offer 0% introductory rates? Is there an annual fee associated with the card? Do they offer reward points? Will you be charged for the balance transfer itself?
Annual percentage rate (APR)
The annual percentage rate (APR) is basically the interest rate you’ll be charged on your credit card balance. When you transfer a balance from one card to another, the APR on the new card will determine how much interest you’ll pay on that balance.
Ideally, you’ll want to transfer your balance to a card with a lower APR than your current card to save money on interest charges and pay off your debt faster.
Promotional periods and introductory rates
While a lower interest rate may seem like a no-brainer, some cards may offer a temporary promotional rate that jumps up after a certain amount of time. Make sure you understand when and how the interest rate may change so you can plan accordingly.
Credit limit
Your credit limit is the maximum amount of credit you can access on a credit card. When you transfer a balance to a new card, the credit limit on that card will determine how much of your balance you can transfer. Make sure the credit limit on the new card is high enough to accommodate the balance you want to transfer, as attempting to transfer more than the limit can result in fees and other penalties.
A high credit limit is beneficial for balance transfers. With a higher credit limit, you’ll have more flexibility to transfer larger balances and potentially save more on interest charges.
Once you transfer the balance from the original credit card to the new credit card, the balance reverts to zero. It doesn’t close the account, so you’ll still have that available line of credit. You’ll actually lower your debt-to-income ratio by transferring the balance.
Credit score requirements
You’ll need a good to excellent credit score to qualify for a balance transfer credit card in most cases. Balance transfers are a risk for credit card companies, so they’ll want to ensure the applicant is a good candidate. Typically, you’ll need a score of at least 670 for these types of cards. You may still qualify for a balance transfer card with a lower score, but your APR will likely be higher and your credit limit lower. In this case, you’ll really want to weigh the pros and cons to be sure it’s worth it.
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Income requirements
Balance transfer credit cards often have a minimum monthly income requirement, although the specific minimum income requirements are not universally published or standardized. Your income is one of the several factors that impact the approval and approval amount.
In addition to income requirements, credit card issuers will also look at your debt-to-income ratio, which is a measure of how much debt you have compared to your income. Ideally, your debt-to-income ratio should be below 30%, although some lenders may accept higher ratios.
2. Gather required documents
When applying for a balance transfer card, you’ll need to provide some information to prove who you are and your financial situation. Common documents include proof of identity such as a passport or driver’s license and proof of address such as a recent utility bill. You may also need other financial documents such as bank statements or pay stubs. Make sure you have all the required documents ready before starting your application. Not having the right paperwork can slow down the process.
3. Submit an application for a balance transfer card
Once you have collected all the necessary documents, the application process is typically straightforward. Many cards can be applied for online, and you usually get an instant decision. If successful, you can then start the process of transferring over any existing balances from other cards. This involves giving the credit card company specific details about the accounts that need transferring.
A Tool To Help You Conquer Your Debt
A balance transfer may not come with a cape and a mask, but it still can be a financial superhero that can save you from the villainous high-interest rates holding you back. By finding the right balance transfer card, transferring your balance, and paying off your debt as soon as possible, you can take control of your finances and start living your best life. Keep in mind that it takes commitment and dedi
cation to pay off the debt as soon as possible to really get rid of it.
Just like how superheroes never give up on their mission to save the day, you should never give up on your mission to achieve financial freedom.
FAQ
What is the process for transferring a credit card balance?
The process for transferring a credit card balance involves contacting the new issuer and providing the details of your existing credit card, including name, address and account number. The new issuer will then transfer the balance to your new account.
Are there any fees associated with transferring a credit card balance?
Yes, many credit card issuers charge a fee for transferring a balance, typically 3% to 4% of the amount transferred. It is important to check with the particular issuer before proceeding with any transfer to determine what fees might apply.
How long does it take to transfer a credit card balance?
The time it takes to transfer a credit card balance varies depending on the issuer, but generally it can take anywhere from four days to three weeks for the funds to be fully transferred. Some issuers may extend introductory offers that waive any fee or interest rate associated with the transaction during this timeframe.
