How To Best Pull Off A Balance Transfer

Borrowing, Credit Cards


By Tracy Scott

Have you been ignoring those credit card offers that arrive in your mailbox each week? If so, reconsider slam-dunking them into the circular file… especially if you have credit card debt you’d like to eliminate. Sound counterintuitive? A balance transfer may be the quickest way for you to pay off your current credit card debt. Learn how to spot the best ones (often found online) and how to perform an easy transfer that can help you pay off your debt quicker and with less interest.

Step 1. Understand the Basics

All balance transfer credit cards are not created equal. Before you apply for a zero-interest credit card, you need to know the important aspects of selecting a new card that should impact your final decision. Banks are competing for your business, so be sure to compare different balance transfer fees, post-introductory rates, and balance transfer limits. There is no one perfect card for every borrower.

Financial Advisor Stephanie Bacak of Capstone Global Advisors says that reducing interest is a great way to move toward your financial goals. “In the case of a debt transfer, we look at the length of the zero-interest period and for transfer fees that might be hidden on either side of the transaction, and what the interest rate will be after the promotional rate has expired.”

Step 2. Grab Your Latest Credit Card Statements

You’ll need your exact credit card balance as of the day you make the transfer along with the account number. Retrieve this information by calling your current credit card issuer or accessing your online account. If you have several high-interest credit card balances, determine the total dollar amount you would like to transfer. Consolidating multiple credit cards must be done at the same time to fall under a particular promotional offer.

You can only transfer up to the approved amount on your new zero-interest credit card. For example, if your total credit card debt is $10,000 and you are only approved for $8,000, then $2,000 will remain on your current high-interest credit cards.

Step 3. Complete the Zero-Interest Credit Card Application

You can apply online or via telephone. If you have multiple high-interest cards to transfer to the new zero-interest card, then submit your application via phone. Speaking with a live representative will give you an opportunity to ask questions and ensure the new card is a right fit for your situation.

Balance transfers may take a few weeks, so be sure to make the required minimum payments on your current cards until the transaction has been completed. If you fail to do this, you could be subject to late fees on your current cards.

Step 4. Pay Off the Debt

To reap the full benefits of the balance transfer, you must have a strategy. Jennifer McDermott, Communications Manager and Consumer Advocate at finder.com agrees, “The final and most important step is to develop a plan of how you are going to pay off the debt during the 0% interest period.” For example, divide your balance by the number of billing cycles in the promotional period to determine the amount you’ll need to pay each month to eliminate your debt.

The Fine Print

  • Zero-interest credit cards are usually tied to an introductory promotional period of 12-21 months and vary by bank.
  • A credit score of at least 680 is often required. You can check your credit score and read your credit report for free within minutes using Credit Manager by MoneyTips.
  • Fees apply. A 3-5% balance transfer fee is typical. This is a one-time fee added to the new card upon issuance.
  • Don’t miss a payment or make late payments. Not only will this harm your credit score, but the regular Annual Percentage Rate (APR) may apply to your balance immediately.
  • The zero-interest rate often applies to the balance transfer only. New purchases and cash advances may carry additional APRs.

Transferring your high-interest credit card balances to a zero-interest card is a smart decision which can help you achieve your financial goals sooner. This easy move can help you loosen a tight budget by significantly reducing your monthly debt payments, avoid unnecessary financial stress, and finally take control of your finances.

If you want to see if you qualify, check out our list of 0%-balance credit card offers.

Photo ©iStockphoto.com/SIphotography

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