If youâre struggling to pay off high-interest debt and want to speed up the process, you might consider a balance transfer credit card. By moving your high-interest debt to a card with a low or 0% promotional annual percentage rate (APR), you may save on interest.
- How a credit card balance transfer works
- Research balance transfer credit card offers
- Apply for a balance transfer credit card offer
- Transfer your old balance
- Pay down your new balance
- Factors to consider for a balance transfer card
- Balance transfer terms
- Credit score
- Interest on new purchases
- Weigh your options carefully with a balance transfer credit card offer
Hereâs what you need to know about using balance transfer credit cards to pay off your debt faster.
How a credit card balance transfer works
Transferring your balance is usually fairly simple. Hereâs how to get started.
Research balance transfer credit card offers
Compare cards on key factors such as APR and balance transfer fees. You can also review the eligibility criteria, including minimum credit score and income requirements, to see which cards youâre likely to qualify for. Some banks let you prequalify for credit card offers, which can help you narrow the field while avoiding a hard credit check.
Apply for a balance transfer credit card offer
When youâre ready, apply for the balance transfer credit card that best fits your needs.
Most applications will require a combination of personal and financial information, including your name, date of birth, current and previous employers and your gross annual income. The credit issuer will review your application and check your credit. If the issuer approves your application, it will also provide the specific terms youâre approved for, including your credit limit and interest rate.
Transfer your old balance
To transfer your balance, youâll need to submit a transfer request to your new card issuer. You can usually do this online or by contacting customer service. Since the transfer can take time, itâs important that you continue to make payments on your other debt until youâve confirmed the transfer has gone through.
Pay down your new balance
Once your transfer is complete, you can start paying off the balance on your new card. Ideally, you want to pay off as much of your debt as possible before the promotional rate expires.
To keep your debt from growing further, avoid making new purchases on your balance transfer credit card, especially if it doesnât offer the promotional rate on new purchases.
Factors to consider for a balance transfer card
When comparing balance transfer credit cards, there are some key things to consider.
Balance transfer terms
Before you choose a new card, make sure you understand these concepts:
- Promotional APR. On balance transfer credit cards, the promotional APR is typically low or even 0% during the promotional period.
- Regular APR. The regular APR is how much youâll pay once the promotional period ends. If you havenât fully paid off your balance, the new APR will apply to the remaining amount, plus any new purchases.
- Length of promotional period. Promotional periods typically range from six to 18 months. During this time, you only have to pay the promotional APR on your transferred balance. Once the promotional period ends, you start accruing interest at the regular rate.
- Balance transfer fees. Most cards charge a balance transfer fee. Fees typically range from 1% to 5% of the amount you transfer.
Credit score
Your credit score is one of the variables credit issuers consider when determining whether to approve your application and the terms theyâll extend to you.
A higher credit score can help you qualify for cards with more favourable terms.
Interest on new purchases
Many balance transfer credit cards donât offer the promotional rate on new purchases. Those purchases accrue interest at the standard rate. If you want to use a balance transfer credit card to make it easier to pay down debt, avoid making new purchases on the card.
Weigh your options carefully with a balance transfer credit card offer
A balance transfer credit card can help you save money on interest and pay off your debt faster, but finding the right card takes careful consideration.
Give yourself time to research different cards from various financial institutions. Compare multiple cards on key factors like interest rate and balance transfer fees to help you find the best card for you and your financial goals.
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