How to Use Balance Transfers to Pay Off Credit Card Debt



How to Use Balance Transfers to Pay Off Credit Card Debt

Paying off credit card debt can be really hard. The interest rates are super high and it feels like you’re never making progress. But balance transfers can help! They let you move your balance to a new card with a 0% intro APR so you can pay off your debt faster and save a ton on interest. I struggled with credit card debt for years until I learned how to use balance transfers the right way. In this article, I’ll explain exactly what balance transfers are, how they work, and how to use them to crush your credit card debt fast!

What is a Balance Transfer?

A balance transfer is when you move an existing credit card balance from one card to a new card. Many credit cards offer 0% intro APR balance transfer offers that let you avoid interest for 12-21 months. It’s an awesome way to pay off your debt faster!

For example, let’s say you have a $5,000 balance on Card A with a 16% APR. You open a new Card B that has 0% intro APR on balance transfers for 15 months. You can transfer the $5,000 balance from Card A to Card B so you don’t have to pay interest for 15 months! Then you can use the 0% period to pay off as much as possible without racking up new interest charges.

How Do Balance Transfers Work?

Balance transfers are easy! Here are the basic steps:

  1. Find a new credit card with a 0% intro APR balance transfer offer. Look for at least 12 months interest-free.
  2. Complete the application and get approved for the card. Make sure you have good enough credit (usually 670+ credit score).
  3. Once approved, you can transfer balances from your other cards to the new card, up to the credit limit. There is usually a balance transfer fee of 3-5%.
  4. Stop using the old cards and focus on paying off the new card before the 0% intro APR period ends! Make bigger payments to pay it off faster.
  5. Avoid new purchases on the card so you can pay off the transferred balance. The 0% rate usually doesn’t apply to new purchases.

And that’s it! The new card will send payments to your old cards until the balances are paid off. It consolidates your debt into one place at 0% interest.

Know the Fees

There are a few fees to watch out for with balance transfers:

  • Balance Transfer Fee: This is usually 3-5% of the amount transferred. So if you transfer $5,000, you may pay $150-$250. It’s still worth it to avoid interest!
  • Annual Fee: Some cards charge an annual fee. Make sure it’s affordable for you.
  • Penalty APR: If you make a late payment, the 0% intro APR could end early and your rate may shoot up. Set payment reminders!
  • Balance Transfer Limit: This is the max amount you can transfer. It’s usually lower than the total credit limit.

As long as you pay on time, the fees are very small compared to the amount of interest you save!

How to Choose the Best Balance Transfer Card

Choosing the right balance transfer card is key. Here are some tips:

  • Look for 0% intro APR periods of at least 12 months, ideally 15-21 months. This gives you more time to pay off your balance.
  • Compare balance transfer fees and annual fees. 3% fee and $0 annual fee is ideal.
  • Make sure you have a good credit score to qualify. Shoot for at least 670.
  • Look for cards with no penalty APR so your rate doesn’t spike if you make a late payment.
  • Consider your monthly payment. Can you afford the minimum payments? Set a budget.
  • Look for additional card perks like rewards, purchase protection, etc. But focus mainly on the 0% offer.

I always use sites like NerdWallet and Credit Karma to compare options. Their tools make it easy to find the best balance transfer card for your needs.

How Much Can You Save?

The amount you save with a balance transfer depends on your balance, interest rate, and the length of the 0% intro period. Let’s look at an example:

Let’s say you transfer a $5,000 balance from a card with 16% APR to a card with 0% intro APR for 15 months. If you pay $200 per month, here’s a comparison:

Without Balance Transfer:

  • Interest paid: $1,149
  • Time to pay off: 31 months

With Balance Transfer:

  • Interest paid: $0
  • Time to pay off: 15 months

By transferring the balance to a 15-month 0% APR card, you save $1,149 in interest and pay off your debt twice as fast! The savings really add up, especially if you have high-interest debt.

Should You Do a Balance Transfer?

Balance transfers aren’t right for everyone. Here are some things to consider:


  • Save a ton on interest charges
  • Pay off debt faster
  • Consolidate multiple balances
  • Can improve credit score if used responsibly


  • Balance transfer fees apply
  • Need good credit to qualify
  • 0% period eventually ends
  • Risk of penalty APR
  • Temptation to overspend

Overall, balance transfers are a smart move if you have good credit and a plan to pay off your debt aggressively. But they aren’t a quick fix – you need discipline to pay off the balance in full before interest kicks in again.

Set a budget and make payments on time. Get motivated to live debt-free! What are you waiting for?

Tips for Successfully Paying Off Your Debt

Here are my top 7 tips for making sure you crush your credit card debt using a balance transfer:

  1. Make a payoff plan. Calculate how much you need to pay each month to pay off your balance during the 0% APR period. Try to pay even more each month.
  2. Pay on time. Set payment reminders and autopay to avoid missed payments and penalty APRs. Even one late payment can sabotage your progress.
  3. Stop using old cards. Put away old cards with balances you transferred. Don’t be tempted to run up new balances.
  4. Reduce expenses. Cut discretionary spending so you can make bigger debt payments each month. Every dollar counts.
  5. Find other income. Consider side jobs like rideshare driving, tutoring, freelancing to bring in extra cash for payments.
  6. Track progress. Log your payments and balance online to see your progress. It will keep you motivated as the balance goes down.
  7. Reward milestones. Celebrate each debt payoff milestone, like each $1,000 paid off. You deserve it!

Stick to your payoff plan and you’ll be debt-free before you know it! It takes some diligence but you can do it.

Alternatives to Balance Transfers

Balance transfers are a great option, but not the only option. Here are a few other ways to pay off credit card debt:

  • Debt management plan – Work with a credit counseling agency to negotiate lower interest rates and consolidate payments.
  • Debt consolidation loan – Combine all debts into a personal loan with lower interest rate.
  • Credit card hardship program – Ask your credit card company for reduced rates/fees if you’re struggling.
  • Debt settlement – Stop paying cards and negotiate smaller lump sum payoffs (risky).
  • Bankruptcy – Eliminate eligible debt through Chapter 7 or Chapter 13 bankruptcy.
  • Budgeting and extra payments – Slowly pay off cards with your monthly budget without transfers.

Balance transfers have the benefit of 0% interest and quick payoff timelines compared to these other options. But everyone’s situation is different. Talk to a credit counselor or financial advisor to explore all your debt relief options.

The Risks of Balance Transfers

Balance transfers can be risky if not used carefully. Here are some potential pitfalls:

  • Running up more debt on old cards after transferring the balances.
  • Overspending on the new card and losing track of your payoff plan.
  • Making late payments and triggering penalty interest rates.
  • Not paying off the full balance by the end of the 0% APR period.
  • Transferring more than you can realistically pay off in the intro period.
  • Missing payments and hurting your credit score.
  • Getting stuck in a cycle of balance transfers without ever paying off debt.
  • Paying balance transfer fees on multiple transfers over time.

The key is having a solid payoff plan and the discipline to stick to it. Never transfer more debt than you can realistically pay off quickly. And stop using those old cards!

Talk to a Credit Counselor

If you’re feeling overwhelmed by credit card debt, talk to a nonprofit credit counseling agency like the National Foundation for Credit Counseling (NFCC). They can…

  • Review your full financial situation.
  • Help choose the best payoff strategy.
  • Set up a debt management plan.
  • Negotiate lower rates and payments.
  • Help avoid bankruptcy.

Having an expert guide you through all your debt relief options is so helpful.

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