A Balance Transfer allows you to transfer your current balance from a credit card or loan to another credit card. Some new credit cards offer low introductory APRs on Balance Transfers. A credit card you already have may also occasionally offer low promotional APRs on Balance Transfers. These low introductory or promotional APRs are for a specified period, after which the credit card’s standard APR for Balance Transfers applies.
Why would you transfer a balance? There are a few situations when it may make sense. For example, you might have another credit card with an outstanding balance that’s incurring too much interest. Or maybe you took a loan to make a large purchase that you are paying off over time, and now you have a credit card with a low intro APR offer that will allow you to pay less interest on that debt for a specific period.
In addition to reducing interest charges, balance transfers can also help consolidate debt. Let’s take a look at how to use Balance Transfers as a tool to more efficiently pay off debt.
How to transfer a balance
Here’s how to transfer debt to a credit card using a balance transfer.
Understand your card’s terms and conditions
Before you transfer a balance, it’s important to understand any relevant terms and conditions. Be sure to know your intro promo APR on balance transfers, how long it applies and what the APR on your outstanding transferred balance will be when it ends. Most cards charge a Balance Transfer fee, which is typically either a flat fee or a percentage of the balance transferred (whichever is more).
Transfer the balance
How you transfer a balance can differ depending on the card issuer. You might be able to initiate the Balance Transfer when you’re approved for a new card. You can usually perform a Balance Transfer through your online account or app and by calling your bank’s customer service.
Using a Balance Transfer to pay off debt
Don't let the fact that you're paying less interest on the balances you've transferred stop you from paying off your debt in a timely fashion. Remember, after the low-interest period, any remaining balance from the transfer will start incurring interest charges at the credit card’s higher standard APR for Balance Transfers. So, it’s important to put together a budget and develop a plan for paying your debt off in a timely manner. Avoiding new purchases on the card (and other cards) can help you focus on paying off the entire transferred balance before the introductory or promotional period ends.
Remember, the low introductory or promotional rate on Balance Transfers does not apply to other transactions you make on the credit card, such as new purchases (unless you also have a low intro or promo APR on purchases) and cash advances.
Furthermore, if the credit card does not also have a low introductory or promotional APR on purchases, you could pay the standard APR on those purchases unless you pay the entire balance, including the balance you transferred, in full by the due date. This is another reason it’s important to read the terms and conditions on your credit card.
Should you transfer a balance?
In short, a Balance Transfer can be a good idea if it saves you money on interest charges and makes repaying your debts more convenient.
A Balance Transfer can be a smart move if you have a low introductory or promotional APR offer and are confident you can pay off all or most of the debt before the intro or promo period ends. This strategy can save you money in interest, which can help you pay off your debt more quickly.
Balance Transfers can also be helpful if you find it difficult to keep track of multiple credit card or loan balances. Consolidating these debts into one credit card account can save you the time and effort of handling debt through multiple accounts.
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.
