How Do Balance Transfers Work?

Credit card balance transfers allow you to move an unpaid balance from one card to another, potentially saving money on interest.

Many credit cards offer promotional interest rates on balance transfers. Transferring a balance to one of these cards can help you pay down your debt without accruing as much interest, at least during the promotional period – but you may also pay a fee for making the initial transfer.

Get all the facts and do the math to decide whether a balance transfer is right for you. Once you understand the requirements and purpose of a balance transfer, find a card with a balance transfer offer that meets your needs.

How much can you transfer to a balance transfer card?

Each credit card with a balance transfer offer will have a balance transfer limit based on your credit line and other factors: this is the maximum amount you can move from another card to the new card.

You can transfer balances from multiple cards, provided they do not exceed the limit.

While you can transfer balances from multiple cards, keep in mind there is typically a balance transfer fee for each balance transferred.

What costs are associated with a balance transfer?

There are two main costs associated with balance transfers: interest and balance transfer fees.

Interest charges

Some credit cards offer a low introductory APR on balance transfers for a set period. After this promotional period, the credit card issuer will apply the standard balance transfer APR to any unpaid balance. This APR is typically the same rate as your standard purchase APR but can differ. Be sure you understand when your balance transfer APR will change and the rate compared to the rates of your other credit cards before you commit to a new balance transfer credit card.

Balance transfer fees

While balance transfers can help you save on interest on existing balances, it's common to get charged a fee for transferring a balance.

These fees typically are charged as a percentage of each transferred balance with a set minimum fee, whichever is greater.

Because these fees can add up, it's important to weigh what you'll pay in fees against what you expect to save in interest.

Will you pay interest on new purchases with a balance transfer credit card?

Typically, credit cards have separate APRs applied to purchases and balance transfers.

If your new credit card has a low introductory APR on balance transfers for a certain period, but the card doesn’t include a low introductory APR offer on new purchases, you will pay the standard interest rate on those purchases unless you pay your entire balance, including the balance you transferred, in full by the due date. Before you put new charges on a balance transfer credit card, be sure to read the terms and conditions.

How do you transfer balances?

Once you’ve selected a credit card to move your existing debt to, you can arrange the transfer with your card issuer. They’ll need details about the account you’re transferring a balance from.

Some card issuers will allow you to complete this transaction online.

How can you save money on balance transfers?

By understanding your financial situation, shopping around for available cards, and sticking to a repayment plan, you can maximize the value of a balance transfer.

Check your credit score and existing credit cards

Before you begin shopping for a new balance transfer credit card, know your credit score and the terms and account activity on your existing credit cards. When looking at your existing credit cards, note the current balances, purchase APRs, and any balance transfer offers you may already have access to on those cards. Knowing this information will help you determine if applying for a new balance transfer credit card is worthwhile.

Find the right balance transfer credit card for you

Knowing your credit score may help you identify credit cards you’ll likely qualify for.

Most balance transfer credit cards require solid credit to qualify — but even if you don't have sterling credit, you may still be approved for a card with a lower promotional APR for balance transfers than the APR you’re currently being charged on your existing credit card balance.

Also consider the length of time the low introductory APR applies and the fee each card charges for balance transfers. To get the most out of a balance transfer and give yourself headroom to tackle your debt, you may want to find a new card with the longest period for the low introductory APR. At the same time, you'll want to minimize how much you will pay in fees for the balance transfer transaction. Crunch the numbers to find the card that helps you maximize your savings.

Make a plan to pay off your balance

Balance transfers make the most sense when you have a plan to address your transferred debt. A balance transfer credit card can give you an opportunity to pay down your debt with a low intro APR for a period of time — so it helps to be proactive in getting a handle on what you owe.

Look at your expenses. Consider making a budget before you apply for a balance transfer: you will want to have a repayment plan ready as soon as the transfer takes effect.

Avoid new purchases on your balance transfer credit cards

While a balance transfer credit card may offer a low introductory rate on new purchases too, the main benefit of getting a new card for a balance transfer is to get a handle on your existing debt.

A low introductory rate on new purchases may be enticing, but often the best strategy for tackling your debt is avoiding new spending. The last thing you want is to find yourself deeper in debt at the end of the card's introductory period.

Find your best balance transfer credit card offers

With this knowledge in hand, find credit cards with balance transfer offers with the most attractive terms and get ready to apply.

Check out Citi's balance transfer credit cards to see if any of Citi's balance transfer offers are right for your situation.

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.

Additional Resources

  • Utilize these resources to help you assess your current finances & plan for the future.

  • Learn how FICO® Scores are determined, why they matter and more.

  • Review financial terms & definitions to help you better understand credit & finances.