Balance Transfer

A balance transfer lets you move high-interest credit card debt to a card with a lower rate—often 0% APR for 12-21 months. This can save thousands in interest and help you pay off debt faster.

How It Works: You get approved for a balance transfer credit card offering 0% APR for 18 months. You transfer your $5,000 balance from a card charging 24% APR. During the promotional period, every payment goes toward principal instead of interest.

Key Costs:

• Balance Transfer Fee: Typically 3-5% of transferred amount (so $150-250 on $5,000)
• APR After Promo: Usually 18-29% APR once promotional period ends
• Annual Fee: Some cards charge $0, others charge $95+

Break-Even Example: $5,000 at 24% APR costs about $100/month in interest alone. A 3% transfer fee ($150) pays for itself in 6 weeks of saved interest.

Important Rules:

• Pay off balance before 0% period ends
• Can't transfer between cards from the same bank
• Make all minimum payments on time (late payment kills promo rate)
• Don't make new purchases on the balance transfer card

Best For: People with good credit (670+ FICO), committed to paying off debt in 12-18 months, and disciplined enough not to rack up new charges.