A balance transfer allows you to pay off the balance on one credit card by transferring the debt to another card. Typically, balance transfers are used as a way to lower the amount of interest being charged on the outstanding debt. The process is simple if you receive an offer, but you can't always get a low rate on a card unless you have a good credit rating. If you carry a balance, however, a transfer can be worth the effort as it can save you substantial amounts of money on interest payments while preserving your credit rating.
Find a Low Rate
The first step is to see if you can make a balance transfer with credit cards you already have. This will help you avoid a ding to your credit score that usually accompanies a request for new credit.
If you can't find a good offer from your existing cards, look for better balance transfer offers from different credit card companies. Some companies offer rates as low as zero percent for qualifying balance transfers.
Check the Fees
In most cases, there will be a flat fee for transferring the balance of one card to another. This is often three percent of the amount of the transfer, with a minimum of $10. However, some cards can charge much higher rates.
Understand the Interest Rate
Review the terms of the offer before you agree to a balance transfer. In addition to the fees associated with the transfer, introductory balance transfer rates often jump up dramatically after the promotional period has ended. Make sure you understand the added costs you could face if you don't pay off the entire balance before the intro rate expires. Also, check the rate you'll have to pay if you make a late payment.
Make Your Transfer
You can make a credit card balance transfer online by providing the card issuer with information about your outstanding debt. Typically, you'll need your account number and the amount you want to transfer, at the very least. You may also need to provide additional information about the receiving bank.
If you have sufficient credit on your balance transfer card, the process will begin immediately. Although the typical amount of time for a transfer to occur is about 7 to 10 days, it may take longer before your balance is officially transferred. During that time, it's important to continue making at least minimum payments on your existing debt to avoid any late payment penalties.
John Hewitt began freelancing in 2008, writing about subjects ranging from music to stock trading, the energy industry and business. His ghostwritten work has appeared all over the Web. He attended New York University, pursuing a bachelor's degree in history.