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What is a balance transfer?

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You’ve probably heard of a balance transfer. But how does one work? And how could it save me money on my next credit card bill?

These are questions we receive from people new to the world of credit cards. So keep reading to find out the answers — plus how balance transfers work, which fees might be associated with a balance transfer and how long a typical balance transfer takes.

What is a balance transfer?

A balance transfer is a type of transaction in which debt is moved from one credit card account to another. If approached correctly, they can save you money on interest payments, meaning if you transfer your balance from a high-interest card to a lower-interest card.

For example, debt moved from a credit card accruing interest to a balance transfer credit card with a 0% intro annual percentage rate (APR) could potentially be paid off interest-free.

Transfer a credit card balance online. RISKA/GETTY IMAGES

What is a balance transfer credit card?

A balance transfer credit card is any credit card that lets you transfer balances from other accounts. These usually offer a 0% introductory APR, incentivizing transfers.

Some issuers also allow you to move other types of debt, such as car, student and personal loans, to your balance transfer card.

Keep in mind, though, that balance transfers come with a few costs and limitations. You’ll generally have to pay a balance transfer fee, which tends to be 3%-5% of the total amount transferred. And your card might have a balance transfer limit, preventing you from moving the entire balance of a card or loan.

Additionally, same-issuer transfers — for example, transferring Chase debt to another Chase card — generally aren’t allowed.

How to transfer credit card balance

The exact steps for credit card balance transfers vary by issuer, but you’ll generally want to:

First, apply for (and get) a balance transfer credit card, preferably with a 0% introductory APR. Check out our list of the best balance transfer personal cards and business cards for options.

Then, initiate a balance transfer with your card issuer. This can typically be done online or by phone, and you’ll need to provide details like the issuer’s name and the type and amount of debt you’re looking to transfer. Some balance transfers can also be initiated via convenience checks.

Once requested, wait to see if the transfer is approved. This could take two weeks or longer. If approved, the issuer will generally pay off your old account directly. The old balance — plus the balance transfer fee — will show up in your new account.

Lastly, pay down the balance and save a (potentially) substantial amount on interest payments.

Bottom line

Balance transfers are when you move debt from one credit card to another. It’s best to do this with a balance transfer card. You’ll then contact your card issuer to transfer the balance over, which can take two weeks or longer. The aim is for you to save on interest payments in the long run.

Related: 5 tips to make a successful balance transfer