How Do Balance Transfers Work?

Paying debts has proved a challenge to many individuals. This is mainly due to the hard economic times or failure to have a good economic plan. This article aims to unravel the different issues surrounding how to balance transfers work.

For years, viable ways of debt payments have been selling assets to raise the funding or leave your assets to debt collection agencies. Often, the latter is a dire financial mistake that can aggravate an already damaged credit report.

Besides dropping your credit score, switching to debt collection agencies will affect your ability to get loans in the future. Nevertheless, you can use a Balance Transfer to clear expensive debt and get a hold of your financial life.

By using a Balance Transfer from one credit card to one or several others, individuals can pay down the expensive debt. 

A Balance Transfer is simply a credit card transaction with a transfer of high-interest dues from one credit card to another with a subsided interest rate.

Why should you look into a Balance TransferCard?

Many credit cards have high Annual Percentage Rates (APR). You can find them imposing interests of $75 to $100 a month or even more. Balance Transfers with zero percent interest will most definitely come in handy. A zero interest allows you to get rid of the financial charges; thus, you can pay off the debt faster and interest-free.

Without a doubt, several credit card companies capitalize so much on the fees since it’s a fundamental part of raising profits. If you don’t scrutinize such cards, you might end up paying colossal amounts in fees.

Cumulatively, you’ll find the cards plunging you to debt rather than helping you pay off your balances.

Types of transferable balances

  • Credit card balances.
  • Home loan medical bills
  • Student loans 
  • Car loans
  • Holiday debts.
  • Utility bills.
  • Small business loans.
  • Payday loans.

Commonly-used terms

Knowing the meaning of various credit-related terms eases the credit Balance Transfer process and helps you avoid multiple problems that arise due to the business jargon employed.

Annual fee

This fee is imposed on all credit card holders yearly, by financial institutions and credit card issuers for holding a credit card.

Annual Percentage Rate (APR)

An APR refers to the interest charged when you fail to pay up your credit balance every billing cycle fully. Various credit card companies have multiple types of APRs. These may include Balance Transfer APR, variable APR, purchase APR, Introductory APR, among others.


A balance is money owed on a credit card bill. The Balance changes each month due to late payments, accrued interests, foreign transaction fees, Balance Transfers, and cash advances.

Balance Transfer

This term refers to moving debt from one card to another, ideally one with lower interest and a 0% introductory period. Therefore, you will use one card to pay off debt accrued by the other card at a low or no interest.

Balance Transfer fee

Whenever you move credit card debt from a card to another, you incur transfer fees. The fee imposed is usually a percentage, commonly a range of 3% to 5% or a cost of $10, of the total amount of money transferred. The credit card issuer that you are moving the debt to imposes this fee.

Billing cycle

A billing cycle is an interval between the billing statements. Each credit card company has its billing cycle. Credit card billings range from 28 to 31 days, but the law prescribes that billing cycles should be equal.

The CARD Act stipulates that the due date should remain consistent and be at least 21 days away from the last date. All your finance charges, credits, fees, and purchases are made available on your account during this cycle.

Cash advance

It is the amount of money that a credit cardholder can withdraw from their credit account. However, the financial institution or the credit issuer may limit a user on a specific limit that they may withdraw.

Keep in mind that this money attracts some interest immediately after withdrawal is complete, hence no grace period. You can access your cash advance through a convenience check via mail from your credit card issuer or merely using the ATM, bank teller, and your PIN.

Cash advance fee

This term refers to money charged when you draw out cash on your credit limit.

It can be a percentage of the funds withdrawn or a flat per-transaction fee. Most banks and credit issuers post the cash advance fee on the day you make the withdrawal.

Credit report

It is an accumulated record of your credit history made by a credit bureau.

The report shows the payment pattern, bankruptcy, lines of credit, reviews from former lenders, and credit issuers. Therefore, credit card companies use the record to determine your creditworthiness.

Credit limit

Credit limits are the maximum amounts credit issuers permit customers to charge with credit card agreement. The term is similar to spending limit, credit line.

For example, if you possess a credit card whose approved credit limit is $5000 and charge $3000 on it, you can still spend $2000 to reach your credit limit.

Credit score

This three-digit number is also known as a credit rating. It is used to present your creditworthiness and help the credit card issuer estimate the likelihood of repaying on time and paying it all back.

The greater your score, the better it is as it shows a high probability of full repayment of loans and in time.

Various aspects are considered when calculating a credit score, such as the payment history, type of credit, new credit, length of credit history, and the total amount owed.

Introductory APR

Credit card companies often offer low or no promotional interest rates to their new customers for some time, usually 12 to 18 months. However, some offer up to 21 months. Once the introductory APR period lapses, a customer is charged the issuer’s regular rate.

Prime rates, or rather a prime lending rate, are the best and most favorable interest rates imposed by credit issuers to their customers. Prime rates help debt repayment as a high prime rate allows you to resolve your debts quickly.

The pros – How Do Balance Transfers Work

  • Balance Transfers allow you to merge payments. By transferring your credit card balances, you can focus on paying off a single amount with one due date.
  • It is an effortless method to manage your debt payment. When you consolidate payments, you have one due date, thus no hustle and bustle of keeping track of multiple due dates and making several payments every month.
  • Balance Transfers save you money on interests. Various credit cards have varying APRs. Some have as low as 0%, 4%, 14% or even 24%. Having this temporary respite from high interests allows you to save up on money used to pay the high-interest rates.
  • When you choose a suitable credit card for Balance Transfer purposes, you can access better terms. Better terms involve reward programs. Reward programs will allow you to easily earn unlimited cash back on purchases depending on the chosen credit card. Such cash backs range from 1% to 5% on places like online shopping, restaurants, gas stations. For instance, Balance Transfer cards, like the Discover it® Transfer Card, offer an impressive rewards program.
  • Credit transfers allow you to get rid of your debts quickly. Credit issuers offer a 0% APR period that is approximately 6 to 21 months. When you take advantage of this period, you can quickly pay off a significant chunk of the debt in a short while.

Drawbacks of using bank transfers

  • The imposition of Balance Transfer fees. It is common for Balance Transfer credit cards to charge a Balance Transfer fee depending on the amount you transfer, additional rewards, or long introductory period. The transfer fee ranges from a minimum of $10 or 3% to 5% of the amount transferred.
  • The 0% interest charged  is solely for a moment. The short 0% APR period that Balance Transfer cards offer is referred to as a grace period. Therefore, you are unable to pay off your dues at the finality of the introductory period.
  • There exists a probability of amassing more debt. Lack of a debt repayment plan, impulse purchasing, overspending are some of the reasons one ends up racking up more debt. Hence, it may result in you not paying off the existing debt that you initially took up the new credit card for.
  • The imposition of credit limits. At times, a consumer may have a high-interest debt of $50,000. However, the new Balance Transfer credit card may not offer that much credit. Therefore, you cannot access an appropriate Balance Transfer credit card.

Tips to consider when choosing an appropriate Balance Transfer credit card


You will most definitely enjoy the perks of a Balance Transfer credit card. A 0% APR allows you to pay off your principal instead of using funds to pay off the interest rate. Simply, you do not have interests to pay! Therefore, try to ultimately pay off your debts within the 0% APR period.

Check out the transfer fees.

All Balance Transfers have transfer fees that range from 3% to 5% of the total amount transferred. To limit the amount of transfer fee paid, you should seek a Balance Transfer offer where the fee is limited to a certain amount. Alternatively, you can look out for credit cards that do not charge fees for Balance Transfers.

Check your credit score

Looking over your credit score is an indispensable step in searching for a suitable Balance Transfer credit card. Your credit score is vital in easing your search for the appropriate card, as you will end up considering a card that allows credit equal to or less than your credit score.

Most credit issuers incorporate the FICO score limits.If you have a score of 300 to 579, your credit score is inferior. A fair rating ranges from 580 to 669; a good score ranges from 670 to 739. If your credit score lies between 740 and 799, it is termed as incredibly useful. An excellent score is one that lies between 800 and 850.

Find out the credit limit

You may seek to transfer all your debt to a single credit card to simplify your debt repayment. However, some credit cards do not offer the needed credit to handle your debt. Therefore, choose a credit card that allows the transfer of all your credit or one with a reasonable approved credit limit.


Various credit card companies reward users when they spend, especially on daily purchases. Credit cards such as Capital One® allow you to earn 3% when spending on entertainment and dining, 2% on grocery store purchases, and 1% on other general expenditures.

Steps on how to transfer credit card balances

Look into your debt

You need to be conscious of their current financial situation. Check how much you owe. Also, review your high-interest advances and credit card balances. Put this information in order, such as a list of debts from the highest interest to the lowest. Using this information, you can choose a suitable card for the transfer as you will look for a card with the most suitable credit limit. Moreover, you are most likely to have sorted out the costliest debt.

Look over your credit score

Your credit score greatly assists you in choosing your most favorable Balance Transfer card. Top tier credit card issuers offer good credit transfer packages to those with excellent credit. Your credit score affects the period you qualify for the 0% APR, the credit limit on the card, and Balance Transfers.

Apply for a credit card

After you have decided on a suitable credit card, you are free to apply for the card. You are required to fill out pertinent information, submit the application, and await your approval. Today, it is relatively easy to fill out an application as you can do it via mail, online, in any of your prospective credit issuer’s branch, or by phone.

Read the fine print

It is imperative that you read in between the lines of your credit card agreements’ terms and conditions. Ensure that the terms and conditions are financially beneficial to you. Additionally, research if the bank has set limitations on various aspects. Such aspects include credit limits, whether you cannot transfer from individual credit cards or the same credit issuer, annual rate, transfer fees, among others enlisted earlier.

Request a Balance Transfer

You can only make Balance Transfers when your credit card application consents. The new credit card issuer makes your Balance Transfers up to the credit limit. To affect this, you have to avail of the new credit issuer, your old account number, the financial institution’s name, and inform them of the amount you want to transfer.

The new credit card company considers the annual fee and transfer fees, consequently raising your total transfer limit.

Carry on with paying off the debts on your old card

After making Balance Transfers, you can fail to transfer all your debt due to credit limits. Therefore, you have to need to proceed with making payments to the old card. By doing so, you avoid fees, interest rates, and the potential damage to your credit score. Moreover, you will pay your debt faster.

Create a budget and repayment plan

When you create a budget, you can avoid impulse spending; thus, keep your spending in check and assures you achieve credit card payments. Have an effective repayment plan that allows you to take advantage of the 0% APR period entirely. An excellent repayment plan ensures you spend as little as possible on interest payments and, consequently, save up your coin.

Approval period

This statement is such a common question in the banking world. Usually, the transfers can take a few days, such as three days. At times, it can go for as long as six weeks to actualize The Balance Transfer. However, Balance Transfers mainly depend on the credit card company and their terms and conditions.

Your approval can also depend on whether you are a first-time bank customer opening up an account. In such a circumstance, your approval period tends to be extended. However, the credit card issuer will disclose when your transfer will be complete. 

Below is a list of credit card issuers and the period a bank transfer takes to its completion.

  • Citibank, a period of 2 to 21 days.
  • Wells Fargo takes a span of at least ten days.
  • The American bank takes up to 14 days.
  • Capital one, which takes up to 3 to 14 days.
  • The chasse bank takes up to 21 days with a minimum of 7 days.
  • HSBC uses up to 7 or even ten business days.

How to ease your credit transfer experience

Avoid charging new expenses and purchases to your credit card

If you rely on your new credit card to pay off your debt, you should avoid adding more debt. Finance experts recommend various types of expenses that you should avoid charging on your credit card.

You should avoid charging your monthly rent and mortgage payment on your credit card as it adds more debt than the extra reward points. Other expenses are large purchases that wipe out available credit, taxes, multiple small impulse purchases, short-term loans, and automobiles.

Make your credit card payments promptly

It is quite tempting to put off your credit card payments, especially when you have inadequate cash or have multiple bills due at the end of every month. Making your credit card payments in good time gives a credit card holder numerous benefits.

One of the benefits is that you enjoy a lower interest rate. Late payments can prompt your interest rate to rise. Credit card companies have the liberty to increase your interest rate if you are behind schedule on your payment for more than 60 days.

Moreover, making timely payments improves your credit score. Making payments on time makes your credit card issuer deem you a reliable credit cardholder. An improved credit score also allows you to get lower insurance rates, and consequently, you can save up your coin.

Do not cancel your old credit card

People usually think that closing a credit card increases their credit scores. On the contrary, closing an old credit card negatively impacts your credit scores due to the credit utilization ratio concept.

The credit utilization ratio (CUR) concept is employed when credit issuers calculate an individual’s credit utilization by adding all the debt one has on all the credit cards. Afterward, the issuer divides the amount by the total of the credit available on all cards. Therefore, refrain from canceling your previous card and aim at keeping your credit utilization ratio (CUR) at 30%.

Adhere to your repayment plan

When you develop a budget and repayment plan, you need to stick to it. Following the budget and repayment plan allows you to efficiently and effectively pay off your debts without overwhelming yourself. Adhering to the plan and budget will enable you to achieve the proper mastery of Balance Transfer credit cards’ art.

0% introductory APR ends

Opting for a 0% introductory APR Balance Transfer card is mainly because you seek to save up and avoid interest costs for a short period. Therefore, you aim at repaying your debt with the % introductory APR period.

However, there is a possibility that the end of your 0% introductory APR is approaching, and your debt is still existent. Therefore, you should look for options and alternatives to give you a great winning chance in this Balance Transfer situation.

Make another Balance Transfer card

Make another Balance Transfer to another credit card. Do not forget that you need to go for one that has a similar 0% APR offer. Therefore, apply, await the approval, and after approval, enjoy your 0% introductory period.

Pay up a considerable amount of the leftover Balance

Since you know when the zero percent APR period will lapse, you can meticulously plan and aim to save up some funds. Save up your funds and use them to pay off the unpaid balance before the due date.

Let the due date catch up and pay the interest

At times, you may be short of cash, or already you have planned for your saving to go to other avenues. However, you will need to make fast payments and numerous one too within a month. By doing so, your interest can even decrease with time.

Look into other finance options

Do this by seeking debt consolidation options such as personal loans. Debt consolidation refers to shifting numerous debts into a new account. These options allow you to cancel your Balance Transfer card and pay the debt off reasonably.

Best Balance Transfer cards

The Citi® cards

Citibank avails the diamond preferred card, double cash card, and Citi rewards card. The simplicity card is another advantageous card since it has late payment forgiveness and an introductory APR period of 18 months.

The Wells Fargo cards

These include the cash wise visa card and the platinum card. The platinum card offers a 0% introductory APR period for 18 months.

US bank cards

The US bank offers a platinum card that offers customers an introductory APR period on Purchases and Balance Transfers. Moreover, it has 20 billing cycles that allow individuals to align and make up a suitable repayment plan effectively.

SunTrust Prime Cards

These cards include the Prime Rewards card that has no initial Balance Transfer fee. Therefore, those who choose this card can efficiently save up as they enjoy putting money away that would have been used in paying for transfer fees.

The HSBC Gold MasterCard

This Balance Transfer card has a long 0% APR period of 18 months.

The Simmons Visa

It has a 0% APR period for 12 months and an 8.25% Regular APR after the introductory-APR lapse.

MBNA MasterCard

The credit card offers an introductory APR period of 0% for 24 months. When the zero percent APR period ends, the card charges a Balance Transfer fee of 1.5% of the total amount of the funds transferred.

Sainsbury’s Bank MasterCard for Nectar Members

The card avails a 0% interest period for 25 months on your Balance Transfers. Afterward, the interest of 1.85% is charged on Balance Transfers. However, you need to be a nectar member for a period of at least six months.


A Balance Transfer credit card is an imperative accessory if you seek to pay your debts swiftly. Remember to take great advantage of the low or zero percent introductory period as much as possible to evade interests. However, you need to be approved by the credit issuer to get a Balance Transfer credit card.

To improve your chances of acquiring the credit card, you should cancel cards that are not in use and ensure you are on the electoral register at your current address.

Credit issues can also disapprove of your credit card application. However, the issuer can only disapprove of you based on your CRA. Your CRA exhibits your repayment history, former repayment difficulties, bankruptcy, and even credit searches.

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Robert Ferry

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