How Credit Card Balance Transfers Work?

Bunty Sharma Credit Card Advisor

Moving outstanding debt on one credit card to another card—usually a new one—is a balance transfer. Credit card balance transfers are typically used by consumers who want to move the amount they owe to a credit card with a significantly lower promotional interest rate and better benefits, such as a rewards program to earn cashback or points for everyday spending.

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What is a balance transfer credit card?

Many credit card companies waive balance transfer fees (which typically range from 3%–to 5% of the transfer amount) to entice cardholders. Often, they might also offer a promotional or introductory period of six to about 18 months where no interest is charged on the transferred sum.

KEY TAKEAWAYS :

• Credit card balance transfers are typically used by consumers who want to save money by moving high-interest credit card debt to another credit card with a lower interest rate.
• Balance transfer credit card offers typically come with an interest-free introductory period of six to 18 months, though some are longer.
• Many credit transfers involve transfer fees and other conditions.
• Any violation of the cardholder agreement can potentially nullify the introductory APR and trigger penalty rates to be applied.