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Bottom Line Up Front

  • Credit card balance transfers can work to help you with debt consolidation.
  • The best balance transfer credit cards can reduce interest charges and the number of monthly payments that must be made.

Time to Read

4 minutes

April 28, 2022

Struggling to reduce your balance because of high-interest credit card rates? A credit card balance transfer can potentially lower your monthly payments. Read on to learn more about balance transfers.

What’s a Credit Card Balance Transfer?

A balance transfer is simple: You apply for a new card that has an interest rate or introductory rate that’s lower than your current card. Then, transfer your balance from your current card to the new one. Basically, you’re using one credit card to pay off another credit card account and getting a lower interest rate in the process.

How It Works

  • Apply and get approved for a new credit card with a lower APR or introductory rate.
  • Provide account information for the existing card to the new credit card company.
  • Decide how much to transfer from the old card to the new. Balance transfers often come with maximums, so depending on your balance, you may not be able to transfer it entirely. Generally, you can only transfer an amount up to your approved credit limit on the new card, including fees.
  • The new credit card company will pay the amount indicated for transfer on your existing credit card (this process can take 2 weeks). You now no longer owe that debt to the old credit card company, as it has been transferred to the new card.
  • Keep making payments on your old card until you get confirmation that the balance transfer has been received. If you have payments due before then, make them by the due date to avoid late fees.
  • Confirm the transfer was correct and successful.
  • Pay your new card by the due date.

Why Consider a Balance Transfer?

A balance transfer can have many benefits for you and your debt management, including the following:

  • Save on interest: Transferring a credit card balance to a new card with a lower interest rate can save money. Some credit card companies offer lower introductory rates for transferred balances.
  • Get better terms: More favorable terms may include lower fees, cash back, rewards programs or other perks.
  • Consolidate monthly bills: Balance transfers can make bill paying simpler. If you transfer several balances to 1 card with a lower interest rate, you’ll only have 1 monthly payment. 
  • Get a fresh start: A balance transfer may help you reduce debt faster.

Which Credit Card Is Right for You?

Before making a balance transfer, compare cards and choose carefully. Many accept transfers, but it only makes sense if it saves money. Look for the following agreement terms:

  • Annual fee. A card with no annual fee is best for transfers.
  • Balance transfer fees. Some card issuers have no balance transfer fees, but 3-5% of the amount you plan to transfer is typical. So, if your balance is $5,000, a 3% fee would cost you $150.
  • Interest rate on transferred balances. Some balance transfer credit cards are designed to have lower introductory APR offers, and 0% APR periods are common.
  • Interest rate on purchases. Want to transfer a balance and make purchases without paying interest on either transaction? Choose a card with a 0% intro APR on both purchases and transfers.
  • Length of the promotional period. A low APR intro period on balance transfers is typically limited, so pick one with a long promotional period. When the introductory period ends, the interest rate will go up—you’ll want your balance paid off by then.

What Happens Next?

Once the balance transfer is complete, avoid using your old card for new purchases and consider leaving the account open, which may benefit your credit score. One of the factors that may be used to calculate your credit score is the length of time you’ve had credit. (However, if the old card has an annual fee or you’ll continue spending, it may be better to close the account.)

Make all payments on your new card on time. One late payment could mean an early end to a low introductory rate or a penalty. Late payments can also wind up on your credit report and could keep you from having excellent credit.

Next Steps Next Steps

  1. Learn more about managing credit cards to help you reach your personal finance goals. At Navy Federal Credit Union, we have tools and experts that can help.
  2. We offer a variety of credit cards, all with no balance transfer fees. If you're ready to consider a balance transfer, find the card that’s right for you.


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.