Credit Card Balance Transfer Cards – How Do They Work?

Image by Alexander Lesnitsky from Pixabay

{Transferring your balance to a new card could help you save money in the long run.}

Balance Due—two words that bring anxiety to many credit cardholders every month. Add to that a high annual interest rate, and it may feel like you’re not making any progress in paying off your principal balance at all. 

A credit card balance transfer may be right for you. By transferring your balance to a card with a zero or low interest rate, you could finally make headway in eliminating your debt for good. Not to mention, some credit card companies offer you additional perks, like sign-up bonuses or even eco-incentives—green rewards for both you and the environment! 

But is this process that straightforward?

What is a card balance transfer?

If you’ve accumulated a large amount of debt on a high-interest credit card, your total amount due may be growing instead of shrinking. 

A credit card balance transfer allows you to move your balance to a card with a low APR. In theory, this will allow you to pay off your debt faster (and avoid paying unnecessary interest). 

While a balance transfer can be a great solution, it’s always worth reading the small print to figure out whether this is the best solution for you. With many balance transfers coming paired with a balance transfer fee or a limited-time low APR offer, it can also be useful to compare options to identify the best deal. 

Factors to consider when shopping for a balance transfer credit card

Balance transfer fees: All good things come with a price—or in this case, a balance transfer fee. This fee is usually a percentage of the balance you’re transferring (say, 3%-5%), and some companies may even offer a lower transfer fee during your introductory period. 

For example, for the first 15 billing cycles, you may be able to make as many transfers as you want (for a 3% transfer fee), and then after that, all transfers will be subject to a higher, 5% fee. Staying aware of your interest rates can help you to make sure you don’t end up paying more in the long run!

Creditworthiness: Transferring your credit balance typically requires an excellent credit score (700-749). This makes sense since your new issuer will be paying off your old card balance—so they’ll usually expect you to be able to pay them on time every month.

A partial or full balance transfer approval: Believe it or not, your new issuer may not approve a transfer of your full balance. Depending on your creditworthiness, they may only approve a percentage of your original balance. Of course, this could change with time (and a positive payment history on your part).

Avoid racking up new debt on your new card: While your new interest-free status may tempt you to make additional purchases, resisting this will help to make it easier to pay off your existing balance. After all, you’re trying to pay off your debt, not build it back up. 

How does a card balance transfer work? 

Before you apply

Determine what you owe and consider if a balance transfer is worth it

Whether you want to transfer a single credit card balance or multiple balances, it is important to understand what you owe, the interest and fees you’ve been paying, and how much longer you’ll need to pay it for.

At this stage, it can also be a huge help to know your credit score. Many credit card issuers that allow you to transfer a balance will still require you to have good – if not excellent – credit. If your score isn’t quite there, it may be beneficial to build your credit up for several months with regular payments, rather than risking the rejection of your application.

Creating a spreadsheet or even keeping a financial journal can be one way to help you keep your debts in order and provide you with a quick glance at your financial situation.

Weighing the pros (low-interest APR, making only a single payment, becoming debt-free faster) against the cons (enduring another credit check, paying a transfer balance fee, etc.) can help you to figure out whether to transfer your credit balance is a good step for you at this point.

This is another reason why keeping a spreadsheet or journal can be so helpful – you’ll be able to assess whether a move like this will be beneficial, or if you should continue trying to pay off your original balance as is. Doing a cost-benefit analysis can help you figure out the best course of action.

Research the field

Not all cards offer the same benefits, so one size definitely doesn’t fit all. Finding the best card for your financial situation starts with figuring out what matters most to you. 

For example, do you want to consolidate multiple credit card balances and pay them off as quickly as possible? Do you want to take advantage of a 0% interest rate for at least 12 months? Maybe you’re looking for all of the above plus a welcome bonus or high cashback incentives.

No matter what, try not to rush the process – it’s often well worth taking the time to find the card that ticks all of your ideal financial boxes.

The application process

Once you have a clear picture of the debt you owe, your creditworthiness, and all of the benefits you want from a transfer balance credit card, you’re ready to apply!

Make sure that you complete the application as accurately as possible, and that the information you provide is truthful.

The application will ask you to provide details about the balance you wish to transfer—such as the amount and where it will be transferred from, etc. So, accuracy is important here.

Remember, it may take anywhere from five to seven days to receive a decision on your transfer. While you wait, it may be a good idea to start coming up with an action plan (i.e., how much you can pay every month, and how you plan to budget for this).

The aftermath

For many applicants, the ideal scenario would be an instant approval of the full credit balance transfer amount.

Unfortunately, this doesn’t always happen, and some card issuers may only approve a portion of your transfer balance. It is important to read the fine print to see what each company’s policy is, and if this could change (as in, maybe later, you could transfer the remaining balance if you’ve remained in good standing for six months or more).

Benefits of transferring 

Let’s take a look at some of the clear benefits – and potential downfalls – of transferring your card balance to a card with a low-to-no APR.

Low initial APR%

While most credit card companies will lure you with an exciting low-to-no introductory APR, you should know that this offer is usually for a limited time only (typically for approximately 12 months).

Once your introductory period ends, your APR% will depend on how high your credit score is—typically, the/higher your credit score, the lower your APR will be at this later stage. With that said, some cards will still assess you at least 13% or higher. 

The bottom line is, you’ll usually be able to pay down your principal balance faster by paying as much as possible from the get-go, before you’re hit with, say, a 23.49% APR down the road.

Transfer one or multiple credit card balances

Let’s say you have three high-interest credit cards in your wallet. Instead of continuing to spend hundreds (if not thousands) of dollars in interest every year, you could transfer all of these balances to a single credit card

Even by paying a balance transfer fee for each account you transfer, the low-to-zero percent interest on your new card can be a significant benefit—one that may outweigh the downside of continuing to pay high interest rates on multiple cards every month.

The best balance transfer credit cards 

If you’re ready to make that leap and pay down your balance faster, here are two of the best balance transfer credit cards for 2021:

U.S. Bank Visa® Platinum Card


  • For 20 billing cycles, you’ll enjoy 0% APR.
  • No annual fee.
  • If you pay your cell phone bill with this card, you can receive up to $600 in damage or theft protection.

The fine print: 

  • After the first 20 billing cycles, your APR will rise to anywhere from 14.49% to 24.49%, depending on your credit score (700-749 is ideal). 
  • No welcome bonus or rewards program.
  • The cell phone protection plan is subject to a $25 deductible.
  • You will usually need at least a credit score of 700 for approval.

Chase Slate Edge℠


  • If you spend at least $500 in the first six months, you’ll receive a $100 welcome bonus (statement credit).
  • Enjoy 0% APR for the first 12 months.
  • No annual fee.
  • Chase Credit Journey will provide you with free access to your credit score.

The fine print: 

  • You won’t benefit from the welcome bonus if you’ve received another new card member bonus for this card in the last 24 months.
  • After the first 12 months, your APR will increase to anywhere from 14.99% to 23.74%
  • An introductory balance transfer fee of 3% (or $5) for any transfer you make in the first 60 days of opening your account. After that point, you’ll pay 5% or $5 (whichever is higher) for any additional transfers.

A credit card that offsets your carbon footprint

If you’re interested in finding out more about how your financial activity affects our planet, consider reaching out to us here at Aspiration.

Our Aspiration Zero is a carbon-neutral credit card that allows you to minimize – or completely offset – your carbon emissions through reforestation projects. 

What’s more, it comes with a free app that will allow you to track your carbon footprint (and the footprint of the stores/vendors you purchase from), in addition to providing you with 1% cashback for every month you reach a carbon-neutral status.

To find out more about sustainable financing, or to join the waitlist for the Aspiration Zero, check out Aspiration today.

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