The basics of balance transfers

Find out what you need to watch out for if you're transferring a credit card balance.

If you have good credit, you may qualify for a balance transfer offer. But what is that, why would you need it and how do you use it responsibly? 

It’s the transfer of an existing balance from one credit card or account to another, usually to save on high-interest payments. Balance transfers can often help you both consolidate debt and pay down debt faster.

How balance transfers work

The balance transfer process is relatively simple. You just move an outstanding balance from one card to another. Most of the time, there is a fee attached. This is usually either a percentage of the balance transferred or a fixed amount.

People are often drawn to balance transfers from credit card companies that offer 0% or low interest rates. These transfers encourage consolidation of balances on to one credit card.  Just keep in mind that promotional rates last for a limited time before they rise.

As Consumer Reports points out, the challenge some people may face is paying off the balance before the rate adjusts. This is often easier said than done. If you’re considering this course of action, make sure you have a ​​solid budget in advance, with a plan for all your payments.

Choosing a balance transfer card

To make the best selection for a balance transfer, consider the following:  

  • Length of time before the rate rises
  • Annual fees 
  • Balance transfer fees
  • Annual fee
  • Average time to process the transfer


You should also ensure you can meet minimum payments and any interest obligation if you do not plan to pay off balances entirely.

This page and the information contained herein is for educational purposes only. The information is not intended to provide legal, investment, or financial advice or to indicate the availability or suitability of any product, service, or strategy to your unique circumstances. For specific advice about your unique circumstances, you may wish to consult a qualified professional. Any links to other websites are included for your convenience only. Bread Financial does not endorse any product or service, and is not responsible for the accuracy or reliability of the information, made available through such sites.

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