How Credit Card Balance Transfers Work

Leah BuryDecember 23, 2020

Reviewed By: Amplify

Are you trying to pay down debt more quickly? Then you may want to consider a balance transfer to a 0% interest credit card. A credit card balance transfer is when credit card debt is moved from one account to another. When you transfer debt from a credit card with a high-interest rate to a balance transfer credit card with a 0% interest rate, you can save money more efficiently.

What Is a Credit Card Balance Transfer?

Like the name suggests, a balance transfer is when you contract with your bank to assume your outstanding credit card debt at another provider, rolling that balance over to a current or new card.

Introductory periods have slowly declined as credit card companies react to the ongoing pandemic.”

Most providers will charge a fee for this exchange – often between 3% and 5% of the amount transferred.

For example, if you have a $10,000 balance split among three different credit cards, asking for a balance transfer will authorize your provider to assume that debt on your behalf. This allows you to consolidate your expenses under a single account (and a single rate). 

Make sure the balance is transferred to the zero card before the due date of the old card with balance, otherwise you risk having a late payment hit on the old card. Balance transfers can take up to a week to ten days to post to a zero card. A safe strategy is to be sure to pay the minimum due on the old card on or before the due date. 

0% interest credit cards

Of course, transferring your credit card balance to a new card doesn’t make sense if both cards feature the same rate. That’s why most balance transfers involve 0% interest or 0% APR credit cards. These are cards with a temporary no-interest period – ranging anywhere from 15 months to 20 months – that allow consumers to focus on repaying their credit card balance without worrying about costly interest rates.

Improved terms after the intro period

Even though the introductory period eventually ends, you can still benefit from a balance transfer credit card that has better terms than your current card. For example, your previous card may have had an interest rate of 20%, and the balance transfer credit card may have a standard interest rate of 15%. 

If you plan to use this as your primary credit card in the future, it is important to compare interest rates after the introductory period. And if you’re not sure what constitutes a good credit card rate, you can always visit the Federal Reserve website to compare annual percentage rates across the industry.

How Credit Card Balance Transfers Work

Balance transfers can be a great way to consolidate your debt. When you have multiple credit cards with varying balances and APRs, it is easy to get overwhelmed. You’re also more likely to fall behind on payments, get confused on the terms and conditions of each card, and potentially get yourself into even more debt. 

Transferring all your balances to a single card simplifies your debt, making you more likely to eliminate additional fees and pay off your balance faster. Balance transfers can also be particularly useful if you are in a position to start chipping away at your outstanding balances, including an increase in income or a decrease in expenses.

Say you have a credit card with an 18% interest rate, a balance of $3000, and a monthly payment of $250. If you switch to a card with an introductory 0% APR period of 12 months and maintain your monthly $250 payment, you can pay off the debt in 10 months and save $322 in interest. You will also reduce your payoff time from 14 months to 10 months due to not paying that interest.

Finding the Right Card for a Balance Transfer

There are a lot of balance transfer credit card options out there. Do your research to find the best option for you. Here are some things to look for.

0% interest periods

Not all 0% interest periods feature the same terms. Over the past year, introductory periods have slowly declined as credit card companies react to the ongoing pandemic. While it might still be possible to find a 20-month period offer at your local bank or credit union, 15-month periods are quickly becoming the new normal for the credit card industry.  But be careful: once you open the card, the clock starts on your 0% interest period. Waiting several months to initiate a balance transfer means you will have the benefit of fewer months at the introductory rate.

A $0 annual fee

Try to find a card with a low or nonexistent annual fee. This will allow even more of your money to go towards paying off your existing credit card balance. As always, do your homework – if you end up saving hundreds of dollars on interest rates over an extended period, that might make a flat annual fee worth the exchange. Credit card companies tend to be very competitive, so you should be able to find a card without an annual fee with just a little bit of research.

Low balance transfer fees

As we’ve previously discussed, most cards charge a balance transfer fee, typically between 3% and 5% of each transfer amount. This amount is added to your total balance. Look for cards with the lowest fee possible to maximize your repayment efforts.

Should You Initiate a Balance Transfer?

Now that you know more about balance transfers and their benefits, you need to decide if this option is right for you. Here are some things to consider.

How is your credit score?

Your ability to be approved for a balance transfer credit card is dependent on your creditworthiness. Most experts suggest you wait until your credit score is in the 670s (or higher) before you even consider applying for a balance transfer.

Furthermore, you need to be careful when applying for cards because your credit score is lowered each time you apply for a card. Multiple account inquiries will be considered a “red flag” to credit card companies.  your homework before applying and you might even consider researching your credit score before applying.  There are several online services that for a minimal fee let you know your FICO score. 

Why did you get into debt?

Did you get into debt because of an unavoidable expense or because of irresponsible spending? A balance transfer credit card will not magically make your debt go away. You need to be strategic and dedicated to paying down the balance. The goal is not to postpone your interest but rather to take advantage of the introductory 0% APR period to pay off your balance.

If you keep making purchases during the introductory period, you will stagnate and be in the same place you started. Furthermore, if you are not responsible enough to stick to the card’s terms, you could actually hurt your credit further.  


As you can see, balance transfer credit cards are a great way to minimize interest rates and pay down debt more quickly. As long as you know all the terms and conditions and have a repayment plan, you should consider a balance transfer credit card to get your own personal finances on track. 

Interested in a Balance Transfer?

Take advantage of an introductory low interest rate period with a balance transfer to a Visa® Platinum Card from Amplify Credit Union.

Leah Bury

Leah is a financial writer based in Austin, Texas. Her articles include advice on investing in real estate, starting small businesses, and optimizing savings. Leah also does some freelance graphic social media work for local creatives.