Key insights:
- A balance transfer allows you to move your outstanding balance or balances from a credit card with a high interest rate to one with a lower interest rate
- A balance transfer can help you save on interest and help consolidate debt, but it also comes with costs, so it's important to calculate your savings before starting one
- You may be able to transfer a balance with an existing Citi card, or get a low intro APR on a new Citi credit card, like the Citi Double Cash® Card, Citi Simplicity® Card, Citi® Diamond Preferred® Card or Citi Strata℠ Card
If you qualify for or already have a credit card with a low introductory annual percentage rate (APR) offer on balance transfers, it could make paying off debt simpler and more convenient. Whether you're already a Citi card-member or thinking of becoming one, a balance transfer could be a way to simplify payments and keep everything organized.
If you qualify for or already have a credit card with a low introductory APR offer on Balance Transfers, it could make paying off debt simpler and more convenient. If you're already a Citi card member, a Balance Transfer could be one more way to simplify payments and keep everything organized in one place.
Read on to find out how to calculate Balance Transfer savings and decide whether a Balance Transfer is worth it.
What is a balance transfer?
A balance transfer is a way to consolidate debt. It allows you to move your outstanding balance or balances from one credit card to another.
Many card issuers offer cards with low introductory APR on balance transfers. The low introductory rate for a card lasts for a set period. After this period ends, your interest rate typically rises to the standard variable APR on balance transfers for the card. If you have an outstanding balance, it will begin accruing interest at this new rate.
Citi offers 4 cards that support balance transfers:
- Citi Double Cash® Card: Get a low intro APR for 18 months on balance transfers from date of account opening
- Citi Simplicity® Card: Get our lowest intro APR on purchases and balance transfers for 18 months with no late fees
- Citi® Diamond Preferred® Card: Get our lowest intro rate on balance transfers for 21 months and purchases for 12 months
- Citi Strata℠ Card: Get a low intro APR for 15 months on balance transfers from date of account opening
When does a balance transfer make sense?
If you qualify for (or already have) a balance transfer card with a low introductory APR and think you can pay off all your debt before the intro period ends, this could mean you may pay less in interest overall.
Even if you're not sure you can pay off the entire debt, a balance transfer could also make sense if you think you can pay off most of your balance before the promotional period is over. Do the math and make sure the amount you’ll end up paying in interest won’t undo the progress you made.
How to calculate balance transfer fees
Most card issuers charge a balance transfer fee for each balance transferred. Balance transfer fees are usually a percentage of the balance transferred or a flat fee, whichever is higher. Calculating a balance transfer fee is relatively simple.
For each balance you transfer, multiply the total balance by the percentage your new card charges for balance transfers. If the percentage amount is higher than the flat fee the card charges for balance transfers, the percentage amount applies. If the percentage amount is lower than the flat fee, the flat fee applies. You can find the information on balance transfers in the terms for your card.
For example, if you’re transferring $1,000 and the fee is 5% or $5 (whichever is higher), the balance transfer fee is $50.
Before you complete a Balance Transfer
If you're transferring a balance onto an existing Citi card, take a moment to review a few key details:
- Check your current APR and available credit
- Look for Balance Transfer offers in your Citi account
- Confirm any Balance Transfer fees and the promotional period
If you’re not a current Citi cardholder, take a minute to see if you pre-qualify for a credit card without impacting your credit. Pre-qualification can help you see what offers you’re eligible for before you commit.
Does a balance transfer impact your credit?
While a balance transfer won’t necessarily affect your credit, some of the actions surrounding it can.
Opening a new credit card:
Applying for a new credit card typically triggers a hard credit inquiry, which can cause your credit score to dip by a few points temporarily.
However, opening a new credit card can also give you more access to available credit and decrease your credit utilization ratio (the amount of total available credit you’re using). Lowering your credit utilization ratio can positively affect your creditworthiness.
Paying down your outstanding balance:
If you use a balance transfer as an opportunity to quickly tackle debt, this can reduce your credit utilization ratio and improve your credit.
Transferring a balance to an existing card:
If you transfer a balance from one card to an existing card, it will likely not affect your credit. You’re not opening a new card, and your credit utilization is unchanged.
Calculating balance transfer savings
To get an idea of how much you could potentially save with a balance transfer, consider what monthly payment you can commit to. Using that amount, calculate the total amount you would pay with a balance transfer card (including interest and any balance transfer fees) by the time you pay off the entire balance. Compare that to what you would pay if, with the same total monthly payment, you continued paying your existing balances (including any interest and fees) until everything is paid off.
Disclosure: This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.
