What Is a Balance Transfer for a Credit Card?

By Blake Guthrie

  • Overview

    A balance transfer between two credit card companies is not something to be taken lightly. The penalties can be severe if something goes wrong, so the fine print should always be read carefully in any balance transfer agreement. Once those p's and q's are tended to, a balance transfer could be a way to reduce the interest rates on the amount owed to a creditor.
  • Function

    A balance transfer allows a card holder who has more than one credit card to transfer the debt from one card to the other. The balance on one card is taken on by another credit card company and added to the monthly statement. The card holder will then be required to make payments on the balance to that creditor, while having the balance to the first creditor relinquished.
  • Methods

    There are three balance transfer methods: check, phone or online. Transferring a balance by check is done by sending a check from the company to which you wish to transfer the balance to the company you are transferring the balance from. These checks are available on request or may be sent in the mail as a promotional offer. Calling the customer service number of the credit card you wish to transfer the balance to will also work, as will logging in to an online account and providing the account number and amount of balance to be transferred. All transfer requests must be approved by the company first before going into effect.


  • Rates and Fees

    People transfer balances between credit cards to take advantage of a lower interest rate on the balance they owe. Most transfers are made as promotional offers and come with a balance transfer fee. Fees vary, but the industry standard for major card holders is 3% of the amount being transferred.
  • Time Frame

    The interest rate on many balance transfers will last until the balance is paid off. There are also limited time frames on promotional offers. A company will offer 0% interest (plus a transfer fee) up until a set date. After that date, the interest rate will return to whatever the normal interest rate of the card being transferred to is.
  • Penalties

    If a card holder defaults under any part of a balance transfer agreement, the penalties can be steep. A 0% interest rate can skyrocket up to 30% simply because of a late payment. Once a balance transfer is complete, all monthly statements and notices should be monitored with due diligence.
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