Balance Transfer
Quick Answer
A balance transfer is moving debt from one credit card to another, typically to take advantage of a lower introductory interest rate.
Definition
A balance transfer is moving debt from one credit card to another, typically to take advantage of a lower introductory interest rate.
Explanation
Balance transfers can help consolidate credit card debt and save on interest. Many cards offer 0% APR for 12-18 months on transferred balances, with a transfer fee of 3-5%. The key is to pay off the balance before the promotional period ends.
Balance transfers don't eliminate debt — they move it. Without a repayment plan, the debt can grow once the promotional rate expires.
Example
Transferring $5,000 at 22% APR to a card with 0% for 15 months and a 3% fee costs $150 upfront but saves over $900 in interest if paid in 15 months.
Frequently Asked Questions
What is Balance Transfer?
A balance transfer is moving debt from one credit card to another, typically to take advantage of a lower introductory interest rate.
How does Balance Transfer work?
Balance transfers can help consolidate credit card debt and save on interest. Many cards offer 0% APR for 12-18 months on transferred balances, with a transfer fee of 3-5%. The key is to pay off the balance before the promotional period ends.Balance transfers don't eliminate debt — they move it. Without a repayment plan, the debt can grow once the promotional rate expires.
Can you give an example of Balance Transfer?
Transferring $5,000 at 22% APR to a card with 0% for 15 months and a 3% fee costs $150 upfront but saves over $900 in interest if paid in 15 months.
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