Then you have to wait for the transfer to go through and the credit processed to the account you’re transferring the balance from. A balance transfer is the transfer of a balance of debt from one account to another, often to transfer balances between credit cards. For example, if you have a $5,000 outstanding balance, and you transfer it to a new card that offers 15 months of interest free financing on balance transfers. This article originally appeared on Money.com and may contain affiliate links for which Money receives compensation. Because balance transfer credit cards provide lower introductory interest rates, they can help you pay off your other high-interest credit card debt faster by allowing you to save on interest charges. But once again, note that your payments will first go towards any purchases you made on that account that incur a balance, before being applied to your 0% APR balance transfer. The other major factor is the card’s balance transfer fee. For more information, read Money’s full disclaimer. © Provided by Money.com Moving outstanding debt on one credit card to another card—usually a new one—is a balance transfer. Opinions expressed on this site are the author's alone, not those of a third-party entity, and have not been reviewed, approved, or otherwise endorsed. What Is a Balance Transfer? In addition to the amount transferred to the new account, the transferring card issuer will often add a balance transfer fee. The longer the offer extends, the more valuable it is. Understanding balance transfer Balance transfers offer credit cardholders the opportunity to move a balance of debt from one card to another — Often to a card with a lower interest rate. A balance transfer credit card can help you get out from under a mound of debt that comes with a high interest-rate on your current credit card. A balance transfer is a transaction where existing credit card debt is moved to another account with a different card issuer. Just note that you cannot transfer a balance between two accounts held by the same card issuer. Here’s why: Suppose a financial crunch lasts for months. If the card has a 0% APR rate, the you won’t incur interest charges on your amount transferred until the promotional rate expires. Opinions expressed in this article are the author's alone, not those of a third-party entity, and have not been reviewed, approved, or otherwise endorsed. What is a Balance Transfer? Then, you’ll incur charges at the standard rate for balance transfers. Nearly all cards with 0% APR balance transfer offers will have a fee of either 3% or 5%, but on rare occasions there have been cards with no fees for transfers completed shortly after you open an account. Also, most credit card issuers will impose a balance transfer fee of 3% or 5% of the amount transferred, especially on promotional financing offers with 0% APR. Effectively, a card issuer pays off the balance from another issuer’s account, which then becomes a debt with the issuer’s own account. Not only will you avoid paying a lot of money in interest charges, all of your monthly payments will go towards the principal, allowing you to pay off your balance sooner. One of the tools they use to do that is a balance transfer. © Provided by Money.com You also earn unlimited 1% cash back on all other purchases. The official balance transfer definition is moving debt from one credit card to another. Plus, there’s no annual fee for this card. Since the amount of the fee is added on to your new balance, a lower fee is much better than a higher one. If your credit card issuer offers balance transfers (and most do), then you can contact them and ask to perform a balance transfer. Like us on Facebook to see similar stories, DC on lockdown and on edge before Biden inauguration. 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