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How do credit card balance transfers work?

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Credit card balance transfers allow credit card account holders to move their unpaid balance from one card to another, potentially saving money on interest.

Many credit cards offer promotional interest rates on balance transfers, many as low as 0% APR (annual percentage rate). Transferring a balance to one of these cards can help you pay down your debt without accruing additional interest—but you likely may also pay a fee for making the initial transfer.

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

How much of your credit card balances can you transfer?

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 different credit cards to one eligible card, typically there will be a fee assessed for each balance you transfer.

What are the costs of a balance transfer?

There are two main costs associated with balance transfers: interest on unpaid balances and new purchases and fees.

Interest charges

  • Some credit cards offer a 0% introductory APR for balance transfers that last for a set period of time. 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 as your purchase APR but can differ. Be sure that you understand when your balance transfer APR will change and how much it is compared with your other credit cards before you commit to a new balance transfer credit card.
  • In addition, if you take advantage of a balance transfer offer without a 0% intro offer on new purchases, you will be charged interest on all new purchases made with your credit card unless you pay the entire account balance, including balance transfers, in full each month by the due date.

Fees on balance transfers

  • 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 different APRs for purchases and balance transfers.

If you complete a balance transfer without a 0% introductory offer on new purchases, you will not be able to avoid paying interest on those purchases unless you pay your entire balance in full by the due date. Before you begin putting new charges on a balance transfer credit card, be sure to read the terms and conditions to understand the consequences of making new purchases.

How do you transfer balances onto a credit card?

Once you have selected either an existing credit card or a new credit card to transfer your existing debt to, you will need to arrange the transfer with your balance transfer credit card issuer, who will need details about the account you are transferring funds from.

Some balance transfer credit cards 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.

1. Understand your credit profile and your total credit card balance

  • Before you begin shopping for credit cards, know your credit score and your current cards' terms.
  • Start by requesting a credit report, then review that thoroughly to report any errors that hurt your credit.
  • Then, take a look at your existing credit cards, noting the current balance, purchase APR, and any balance transfer offer you may have, such as the promo balance transfer APR and balance transfer limit.
  • With that knowledge of your current cards, you can evaluate if a balance transfer to your existing current cards is a good option. You can also look to see if there are balance transfer offers for new credit cards that match your qualifications.

2. Do your homework to find the right balance transfer credit card for you

  • Once you know your credit profile, you'll be able to hone in on the cards that match your needs and which you likely will qualify for. Most balance transfer credit cards require solid credit to qualify—but even if you don't have sterling credit, you may be able to find a card with a lower promotional APR for balance transfers than the APR you are currently being charged.
  • You should also consider the interest and fees charged by each card when you transfer any balances. To get the most out of a balance transfer and give yourself headroom to tackle your debt, you may want to find new cards with the longest introductory low-rate period. At the same time, you'll want to minimize how much you will pay in fees. Crunch the numbers to find the card that helps you maximize your savings.

3. Build a plan to zero out your balance

  • Balance transfers make the most sense when you have a plan in place to address your transferred debt. A balance transfer credit card can give you an opportunity to pay down your debt without paying interest for a period of time on the transferred balance—so you should be proactive about getting a handle on what you owe.
  • This will require a hard look at your expenses and careful budgeting. 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.

4. Avoid new purchases on your balance transfer credit cards

  • While a balance transfer credit card may offer a low or zero rate on new purchases, the main benefit of a balance transfer is getting a handle on your existing debt.
  • A low rate on purchases may be enticing, but the best strategy for tackling your debt is staying disciplined and avoiding new spending. Only make new expenses on your balance transfer credit card when your budget supports it: The last thing you want is to find yourself deeper in debt at the end of the card's low-rate 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.

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