What is a balance transfer?

You've probably heard of a credit card balance transfer — but how does one work? And how could a balance transfer save you money on your next credit card bill?

We receive these types of questions from people new to the world of credit cards, and we have the answers. Keep reading to find out how balance transfers work, including the associated fees and how long a typical balance transfer takes.

What is a balance transfer?

A balance transfer is a transaction in which debt is moved from one credit card account to another. The idea is to save money on interest by transferring your balance from a high-interest to a lower-interest rate card.

For example, you could potentially pay off a credit card balance without incurring any interest charges by moving the debt from your regular credit card to a balance transfer credit card with a 0% introductory annual percentage rate.

What is a balance transfer credit card?

A balance transfer credit card is any credit card that lets you transfer balances from other accounts. Most balance transfer credit cards offer a 0% introductory APR to incentivize 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 that balance transfers come with other costs and limitations. You'll generally have to pay a balance transfer fee of 3% to 5% of the total amount transferred. And your card might place a limit on the transfer amount.

Additionally, same-issuer transfers — such as a transfer from one Chase card to another — generally aren't allowed.

How to transfer a credit card balance

The exact steps for credit card balance transfers vary by issuer.

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The first step is to apply for (and obtain) a balance transfer credit card, preferably with a 0% introductory APR. For options, check out our list of the best balance transfer cards.

Then, initiate a balance transfer with your card issuer. You can typically do this online or by phone; 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 more. 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 while saving on interest payments.

Related: What is a balance transfer fee?

Bottom line

Balance transfers involve moving debt from one credit card to another. It's best to do this with a balance transfer card. Once you have the right card, contact your issuer to transfer the balance. This may take two or more weeks. The aim is for you to save on interest payments in the long run.

Related: How to avoid and reduce credit card interest