A balance transfer credit card offers a powerful way to tackle high-interest credit card debt by providing a 0% introductory APR (Annual Percentage Rate) for a set period, typically ranging from six to 21 months. This allows you to pause interest accrual on your transferred balance, directing more of your payments towards the principal and helping you pay off your debt faster.
What You Need to Know About Balance Transfers
How to Transfer a Credit Card Balance:
- Obtain a Balance Transfer Card: You’ll need to apply for a new credit card that specifically offers a 0% APR promotional period on balance transfers. These cards generally require good to excellent credit (a FICO score of at least 680).
- Initiate the Transfer: Once approved, you can typically initiate the balance transfer online, over the phone with customer service, or sometimes by mail (though this is slower). You’ll provide the new issuer with the details of the old card(s) from which you want to transfer the balance, including the account number and the amount.
- Transfer Completion: The new credit card issuer will typically pay off your old card directly. Your old balance, plus a balance transfer fee, will then appear on your new account. This fee is usually between 3% and 5% of the transferred amount.
- Repay During Promo Period: The goal is to pay off the entire transferred balance before the 0% APR period expires. Once the promotional period ends, any remaining balance will start accruing interest at the card’s standard variable APR.
Example Savings:
Consider a $6,000 balance on a credit card with a 22% APR. Paying $300 per month would take 26 months and incur $1,562 in interest.
If you transfer this to a Citi Simplicity® Card (0% Intro APR for 21 months on balance transfers, then 18.24% – 28.99% variable APR, with an intro 3% balance transfer fee), and continue paying $300 per month, you could eliminate the debt in 21 months with only the $180 balance transfer fee. This would save you approximately $1,362 and 5 months of repayment time compared to the original scenario.
How Long Does a Balance Transfer Take?
The processing time for a balance transfer can vary significantly, from a few days to several weeks, depending on the issuer and the method of initiation.
- American Express: 5 to 7 business days, but potentially up to 6 weeks.
- Capital One: 3 to 14 days, depending on electronic or mail initiation.
- Chase: Most transfers within a week, but can take up to 21 days.
- Citi: 2 to 21 days.
- Discover: Within 4 days for existing cardholders. For new accounts, the account must be open for 14 days before processing begins, then typically 4 days.
- U.S. Bank: Typically within 14 days.
- Wells Fargo: Up to 14 days.
It is crucial to continue making payments on your old accounts until you confirm the balance has been fully transferred and shows as $0. This avoids late fees or additional interest charges.
Balance Transfer Cards to Consider
When choosing a balance transfer card, prioritize the length of the 0% intro APR and consider any associated fees or additional benefits.
- Longest Intro Periods (up to 21 months):
- Wells Fargo Reflect® Card: Offers 0% intro APR for 21 months on qualifying balance transfers and purchases (made within 120 days). A 5% balance transfer fee (minimum $5) applies.
- Citi Simplicity® Card: Offers 0% Intro APR for 21 months on balance transfers (transferred within 4 months) and 12 months on purchases. A 3% intro balance transfer fee (minimum $5) applies, rising to 5% after the intro period.
- Citi® Diamond Preferred® Card: Offers 0% intro APR for 21 months on balance transfers (transferred within 4 months) and 12 months on purchases. A 5% balance transfer fee (minimum $5) applies.
- No-Fee Balance Transfers (Rare):
- Choice Rewards World Mastercard® (from First Tech Federal Credit Union): Features a low variable APR and 2X points on certain categories, with no balance transfer fee. However, these cards typically have shorter intro periods or require credit union membership.
- Rewards and Balance Transfer Combo:
- Chase Freedom Unlimited®: Offers 0% intro APR for 15 months on purchases and balance transfers. It also earns cash back rewards. A balance transfer fee of 3% or $5 (whichever is greater) applies within 60 days, then 5% or $5 (whichever is greater).
Should You Transfer Your Credit Card Balance?
A balance transfer can be an effective debt consolidation tool, but it’s not for everyone. For it to work well, you generally need:
- Solid Credit: A good to excellent credit score increases your chances of qualifying for favorable terms. Even with a lower score, if you can get a lower interest rate than your current cards, it might still be worthwhile, but do the math.
- The Right Amount of Debt: If your debt is very small and can be paid off in three months or less, the transfer fee and wait time might not be worth it. Conversely, if your debt is too high to realistically pay off within the 0% APR period, you might still end up paying significant interest.
- Discipline: A successful balance transfer demands financial discipline. You must commit to your payment plan and avoid accumulating new debt on the balance transfer card or your old, now-empty, cards. If you struggle with spending habits, this might not be the best solution, as it could lead to even more debt.
Bottom Line
Transferring credit card debt to a card with a 0% intro APR can lead to substantial savings and faster debt repayment. However, it requires careful consideration of fees, promotional periods, and your ability to stick to a repayment plan. Ensure the financial math works in your favor and that you have the discipline to pay off the balance before the intro period ends to truly benefit from this powerful debt management tool.