What Is a Balance Transfer on a Credit Card?

A balance transfer is when you move debt you already owe (like a credit card balance) from one account to another credit card, usually to get a lower interest rate for a limited time.

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How a Balance Transfer Works

1. You apply for a credit card that offers a balance transfer.

2. You request to transfer a specific amount from your old card (or other credit account) to the new card.

3. The new card pays the old balance (fully or partly).

4. You repay the new card, ideally during the promo period.

What It Usually Costs

Most balance transfers come with a one-time fee, often a percentage of the amount you transfer.

Example: If the fee is 3% and you transfer $1,000, the fee would be $30.

Also, many cards charge interest on balance transfers right away (often treated like a cash advance), so you usually do not get an interest-free grace period on that amount.

When a Balance Transfer Can Be Worth It

A balance transfer can help if:

• You have high-interest debt and can get a lower promo rate.

• You have a clear plan to pay it down before the promo ends.

Common Mistakes to Avoid

• Only looking at the promo rate, and ignoring the fee.

• Missing a payment during the promo (some offers can end early). Always read the terms.

• Putting new purchases on the same card if it makes your payoff plan harder.

• Not paying it off in time, then getting charged the regular interest rate after the promo.