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If you've got a credit card that's charging interest like nobody's business—or a savings account that's giving you next to nothing in returns—it may be time to look into a balance transfer.
A balance transfer is when you move money—either debt or savings—from one account to another. The goal? To pay less interest on money you've borrowed, to earn higher yields on cash you've saved or just to make your finances easier to manage.
Let's walk through the different types of balance transfers, how they work and what to watch out for before making a move.
What Is a Balance Transfer?
At its core, a balance transfer is the act of moving funds from one type of financial account to another.
There are several good reasons to transfer a balance, depending on the type of account and situation. These include:
- Better interest rates. Whether you're paying debt or growing savings, rates matter. Credit card balance transfers can offer 0% intro annual percentage rates (APRs), while banks might tempt you with higher savings rates.
- Debt consolidation. Instead of juggling multiple debts, you could move them all to one place. One payment, one due date, less stress.
- Simplified financial management. Keeping track of fewer accounts or centralizing your money can make budgeting a whole lot easier.
The most common type of balance transfer you'll hear about is moving credit card debt from one card to another. But that's not the only kind, as explained in more detail below.
Types
Balance transfers come in a few different flavors, depending on what you're trying to accomplish—whether it's cutting down interest, boosting returns or streamlining your finances. Let's start with the basics:
- Credit card balance transfers - This is the big one. You move the amount you owe from one credit card to another—ideally one with a much lower interest rate. Some cards even offer a 0% introductory APR for a set period (say, 12 or 18 months). This can give you breathing room to pay off your existing debt without racking up more interest.
- Bank account balance transfers - This is all about maximizing your savings, rather than limiting your debt. If you have a checking or savings account but spot another with a higher annual percentage yield (APY, the rate you earn on your savings) and lower fees, you may choose to move your funds. Sometimes this happens within the same bank (from checking to savings, for example), or between two different banks.
- Loan balance transfers - Some lenders let you move the remaining balance of a personal loan, auto loan or student loan to a new lender offering better rates, terms or perks. Think of it like refinancing—only you're shifting lenders instead of just renegotiating.
6 Steps To Complete a Balance Transfer
The process for balance transfers may differ slightly from bank to bank and depend on the type of balance you're moving. In general, however, you can follow these six steps.
Step 1: Check eligibility and offers
Before you start shifting funds around, make sure you're eligible. Some offers are for new customers only. Others require a good credit score.
For savings, find out which banks offer the highest APYs with the lowest fees and fewest strings attached. Synchrony's high yield savings account, for example, has no minimum deposit or balance and no monthly fees.
For credit cards, shop around for intro 0% APR offers—but also consider how long the introductory offer applies, what the regular APR is after that period ends, and the card's fees and benefits.
Step 2: Calculate transfer amount and fees
Credit cards may have limits on how much you can transfer, depending on the issuer's policies and your creditworthiness. Once you know your limit, you can calculate the transfer fee—typically around 3% to 5% of the amount transferred.
When it comes to bank accounts, make sure you understand all the terms and whether a minimum balance is required. Some savings accounts, for example, may add fees or lower the APY if your balance falls below a specified limit. There could also be service or wire transfer fees, especially for large sums.
Step 3: Gather your information
Have the following handy:
- Your existing account numbers
- The amount you want to transfer
- Social Security number (SSN) or taxpayer identification number (TIN)
- ID and possibly proof of address
- Routing numbers (for bank accounts)
Step 4: Initiate the transfer
Apply for the balance transfer credit card or new bank account online in your banking app, over the phone or in person at a branch. Regardless of the method, you'll likely need to fill out application forms and submit any necessary supporting documents.
Once you're approved, the transfer can take place. The new card issuer usually handles the process of paying off the old card. For bank accounts, you need to transfer the funds yourself.
READ MORE: 4 Ways to Transfer Money from One Bank to Another
Step 5: Wait for processing
Credit card transfers typically take anywhere from a few days to several weeks, depending on the credit card company.
Bank account transfers can sometimes happen instantly, especially between accounts at the same bank. If you're transferring money from one bank to another, it depends on the method used. For example, wire transfers are often completed within one business day (but charge a fee), while Automated Clearing House (ACH) transfers—the system banks use to move money electronically—are usually free but can take up to three business days.
Step 6: Get confirmation
Keep an eye out for confirmation emails or app notifications. Then log in to both your new and old accounts to make sure that the correct deposit/credit balance amounts were transferred.
Key Points To Remember Before You Transfer
Before you jump into a balance transfer, make sure you know what you're signing up for. A few missteps can cost you more than you save.
Read the fine print
Make sure you understand all the terms and conditions—both during and after the promotion period.
Do the math
A 3% credit card balance transfer fee on $5,000 is $150—likely worth it for a long 0% APR period. But the fee may not be worthwhile for smaller balances. Similarly, an account with a higher APY won't necessarily boost your savings if it also charges high monthly or transaction fees.
Stay on top of payments
Keep making the minimum payments on your old credit card until you see that the balance is gone. Know when the promotional APR expires on your new card and pay down your balance before then.
For bank account transfers, make sure you have enough in your old account to cover any automatic bill payments, or cancel those pre-authorized transactions and set them up with your new account.
Frequently Asked Questions (FAQs)
Q: Can I transfer a balance between any two banks or cards?
Usually, yes—but not always. Some banks restrict transfers between their own cards, and some promotions are for new customers only.
Q: How long does a balance transfer take?
Credit card transfers can take up to six weeks, but are often within three to 14 days. Bank transfers are often faster, especially if both accounts are at the same institution.
Q: Does a balance transfer affect my credit score?
It can, slightly. Applying for a new credit card triggers a hard inquiry, and shifting debt can affect your credit utilization ratio, which is part of your score. Opening a new bank account, however, involves a soft check that won't affect your credit score.
Should You Make a Move?
A balance transfer isn't just a money shuffle—it's a smart strategy when used the right way. Whether you're shaving off interest charges or boosting your savings, it can give your finances a welcome tune-up. Just make sure you understand the rules, read the terms and make the most of the promotional period.
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