At Experian, one of our priorities is consumer credit and finance education. This post may contain links and references to one or more of our partners, but we provide an objective view to help you make the best decisions. For more information, see our Editorial Policy.
In this article:
A balance transfer credit card can offer a helpful way to pay down debt while saving money on interest charges. But understanding how balance transfers work before you apply for a new card is key.
Here are seven balance transfer terms to know if you're considering using a balance transfer credit card to help manage and pay down debt. Although specific credit cards and credit card companies may have different rules and policies for their balance transfers, knowing these terms can help you compare the options and identify the best offer.
Save with an intro 0% APR balance transfer
See the best credit card offers you're more likely to qualify for.
Pick from top balance transfer cards with lengthy intro 0% APR periods on balance transfers.
Apply and pay off high-interest credit card debt at a lower interest rate.
1. Annual Percentage Rate (APR)
Credit cards may have several annual percentage rates (APRs), which determine how much interest accrues on different balances. There may be one for your purchases, another for balance transfers and a third for cash advances.
When a card has a balance transfer offer, you'll receive a lower APR on balances that you transfer to the card. If the offer is for a 0% introductory APR, your transferred balances won't accrue any interest (if you follow the terms of the agreement), allowing you to pay down the balance faster and save money during the promotional period.
However, even if you have a low APR on your balance transfers, your purchases and cash advances might not receive the same promotional APR.
2. Promotional or Introductory Period
Balance transfer offers only give you a lower APR during a limited introductory promotional period. The specific length will depend on the offer, but some last for up to 21 months or billing cycles. Once the promotional period ends, any remaining balance on the card starts to accrue interest based on the card's standard APR.
3. Variable APR
Although your introductory APR may be fixed during the promotional period, most credit cards have variable standard APRs. As a result, the standard purchase, balance transfer and cash advance APRs can move up or down based on changes in a benchmark rate. These changes can affect how much interest accrues and your minimum payment amount.
4. Balance Transfer Check
Your credit card may come with balance transfer checks that you can use to send payments to other credit card issuers or lenders. You also may be able to make out the check to yourself and deposit the "transfer" into your bank account.
Before using a check, make sure it's not a convenience check that will result in a cash advance rather than a balance transfer. You can alternatively request a balance transfer from your online credit card account or by calling your card issuer to avoid any potential mistakes.
5. Balance Transfer Fee
Most credit cards charge a fee for each balance transfer. Often, this is either 3% or 5% of the amount you transfer, with a minimum of $5 or $10 per transfer.
Similar to how you can receive a promotional APR on balance transfers, a card's balance transfer fee may be higher or lower during an initial period. But some credit cards, particularly ones from smaller credit unions and banks, don't have balance transfer fees.
Review a card's terms and fees, and calculate how your potential savings from using a balance transfer offer compares to the upfront cost of the fee.
6. Annual Fee
Some credit cards also charge an annual fee, which you may need to pay when you first open the card and on each cardholder anniversary. Annual fees aren't necessarily bad, as some cards that charge annual fees also have lots of cardholder perks and high rewards rates.
However, if you're opening a credit card to transfer and pay down balances, you might want to look for options without annual fees and put the money toward paying off the debt.
7. Balance Transfer Limit
Your credit card's credit limit determines how high your total balance can go before your transactions—purchases, balance transfers and cash advances—get declined. But your card may have a balance transfer limit that's lower than its credit limit.
Unfortunately, you generally don't find out your account's limits until after you apply and get approved. And regardless of the account's balance transfer limit, some credit card companies also limit how much you can transfer to their cards within a certain period—such as $15,000 in a 30-day period.
Compare Balance Transfer Offers
You can find lots of credit cards that have balance transfer offers with varying promotional APRs, introductory periods and fees. A 0% APR offer with a long introductory period and low fees may be best. But your credit score will affect your eligibility and balance transfer limit, and you generally can't transfer balances between credit cards from the same issuer.
Comparing the options can help you identify which card will be best, and checking your credit report will give you an idea of which you may qualify for.