How to Transfer Credit Card Balances and Consolidate Debt

Wondering how to transfer credit card balances and consolidate your debt? Depending on your circumstances, you may be able to find a balance transfer offer that will help you achieve your financial goal, whether it's to consolidate debt, pay off your balances or simply reduce the amount of money your debt costs you to carry.

Understanding how to transfer balances

A balance transfer moves the balance you carry on one or more credit cards over to another card that ideally charges less interest. If you have good credit, pay your credit card bills on time each month and want to consolidate debt to reduce the number of monthly payments you have to make, a balance transfer might be worth exploring. It may even help you pay less interest on your credit card balances or pay them off sooner.

Here's a closer, step-by-step look at the process to help you know what to expect.

1List your balances

To get started, write down the credit cards you currently owe balances on, listing them from the highest interest rate to the lowest. Your cards with the highest interest rate cost you the most to carry, so transferring these debts to a low- or no-interest card can be a financially smart move. Once you know how much debt you want to transfer, start searching for balance transfer offers promoted by credit card companies, or contact your bank to ask about any balance transfer offers for current customers.

2Read the fine print

Some credit cards charge a balance transfer fee, which is typically 3% to 5% of the amount transferred or a flat fee. As you review balance transfer offers, remember to read the fine print. Understand what interest rate you'll be charged during the introductory period, what it may increase to once the introductory period ends and what fees the transfer involves. You can use our credit card balance transfer calculator to compare your current card to a new one and determine whether the transfer would be beneficial for you.

3Confirm which balances you can transfer

Some balance transfer offers state minimum and maximum transfer amounts, and some card issuers limit which balances can be transferred. For example, you may be able to transfer a balance on a Discover card to a Visa card, but not from one Visa card to another.

4Pursue the balance transfer

Whether you open a new credit card for the balance transfer or pursue one with a company you already use, you'll need to contact the company to begin the transfer process. You'll likely be asked to provide the account numbers and creditor information for the card balances you want to transfer. Allow a few weeks for all the funds you're transferring to move onto the new card.

Plan for success

Once you've successfully completed the process, keeping these tips in mind will help you get the most out of your balance transfer.

• Mark your calendar: Most balance transfer offers involve a temporary low interest rate that may increase once the introductory period expires. If you still carry a balance when that happens, you could end up paying as much or more than you were on the balance before you made the transfer. It's a good idea to set reminders on your mobile device so you know when your low rate is about to expire.
• Make a payment plan and a goal: Try to eliminate as much of the debt you transferred as possible while you're eligible for the low interest rate, and if possible, increase your monthly payment amount.
• Resist the urge to use the card for new purchases: The low rates on a balance transfer offer may not apply to new purchases you make with the card. The CARD Act of 2009 requires that credit card issuers apply payments that exceed the minimum monthly payment due to balances with the highest interest rate to protect consumers. But any new purchases you make on the card could make it tougher to pay down the balance you transferred.

Transferring balances may not be the right move for everyone. However, if you keep these considerations in mind as you compare credit card offers, they can help you make a choice that supports your unique goals and benefits your financial wellness.