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Bottom Line Up Front

  • Balance transfers can be a great strategy to lower your current credit card interest rate. 
  • You can transfer your balance to an existing card or a new one—but look for one without balance transfer fees to maximize savings.
  • When looking at balance transfer offers, find out if the interest rate increases after a specific period of time.

Time to Read

4 minutes

May 6, 2022

A balance transfer is when you transfer your credit card balance to a new card issued by a different financial institution. Most people do this to save money by taking advantage of a lower or interest-free rate. These rates are usually introductory and will change after a specific timeframe. Depending on your financial situation, this method of debt consolidation can be a great way to manage your personal finances and pay lower interest if you carry a card balance.

Before you act, you’ll want to understand all the details. Here are 7 things you should know before taking advantage of a balance transfer with an introductory APR offer.

  1. Is there a benefit to a balance transfer credit card?

    Transferring your debt to a lower-interest card can really help you save money. For instance, if you owe a large sum on a 23.74% interest credit card, a 0% balance transfer offer on another card could save you hundreds over the course of a year. Use our debt consolidation calculator to see how this could help you pay down your debt faster.
  2. Will I be charged any fees to make the transfer?

    Many financial institutions do charge a fee for each new balance transfer. If, for example, you’re transferring a $5,000 balance, you’d pay a $150 fee at 3% or $250 at 5%. A one-time balance transfer fee like this could end up costing you more than a low APR with no fees. Some financial institutions, like Navy Federal Credit Union, don’t charge any balance transfer fees

    Keep in mind that some credit cards also have an annual fee. A 0% balance transfer offer that has a 5% annual fee could be of greater cost than one that has a 2.99% rate with no fees.
  3. Does the introductory period interest rate also apply to new purchases?

    Some offers only apply to the balance you’re transferring—so, if you make new purchases or get cash advances, you may still pay interest at a non-promotional rate. 
  4. Does the interest rate expire?

    Many balance transfer offers have a low promotional rate for a specific period of time—often from 6 to 21 months. After, that low teaser rate could change to a regular APR, so be sure you know what the rate will be after the promotional period ends. 
  5. Is there a limit on how much I can transfer?

    Some offers have a maximum amount you can transfer, while other offers are limited only by your available credit line. Ask the lender if you’re not sure.
  6. Will transferring to a new card affect my credit?

    If you close the old account, your score may temporarily decrease because it could be based partly on how long you’ve had your accounts and how much of your available credit you’re using, also known as your credit utilization ratio.

    One way a balance transfer might improve your credit score is if you open a new card as part of the balance transfer offer, and you’re approved for a higher credit limit. That would increase your available credit, so the percentage of your debt wouldn’t be as large. The bottom line is balance transfers are a great way to transfer high-interest debt to low-interest debt, and if you already have good credit, paying your statement on time and making the minimum payments may help you achieve excellent credit.
  7. Can I transfer the balance again?

    If you haven’t paid off your balance by the time the promotional rate ends, you may be tempted to transfer it again. While it can be done, frequently opening new accounts while maintaining high debt levels may negatively impact your credit score. And, you usually can’t use multiple balance transfer promotions for different cards in the same financial institution.

Ready to get started? 

Navy Federal offers a variety of credit cards, all with no balance transfer fees.1 If you’re ready to make a balance transfer, find the best balance transfer credit card for you with Navy Federal Credit Union.

Next Steps Next Steps

  1. To find the best credit card to fit your lifestyle, refer to our wide range of credit cards today. 
  2. If you need personalized financial guidance, our personal finance counselors can help with goal setting, budgeting and financial recovery. 


1As of March 10, 2022, nRewards® Secured card rate is 18.00 % APR and will vary with the market based on the U.S. Prime Rate. All other Navy Federal Credit Card rates range from 5.99% APR – 18.00% APR, are based on product type and creditworthiness, and will vary with the market based on the U.S. Prime Rate. ATM cash advance fees: None if performed at a Navy Federal branch or ATM. Otherwise, $0.50 per domestic transaction or $1.00 per foreign transaction. $49 annual fee for Visa Signature® Flagship Rewards.

This content is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.