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High-interest debt can feel like a death sentence. A balance transfer credit card gives you a fighting chance at paying down that debt without drowning in even more interest charges.
With a balance transfer credit card, you can transfer existing debt from other accounts, usually for a fee. Typically, balance transfer credit cards offer qualified borrowers a 0% APR introductory period during which they can pay down their outstanding debt without earning interest on the balance.
If your credit score is in decent shape, you may be able to qualify for a balance transfer credit card. But before you apply, make sure you understand the fees, rates and terms — and know what happens if you don’t pay off the full balance by the end of the promotional period.
What Is a Balance Transfer Credit Card?
A balance transfer credit card is a type of credit card that allows borrowers to move over existing high-interest debt from other accounts. The best balance transfer credit cards will offer an introductory period, typically between six and 21 months, during which borrowers can pay off the debt without accruing any more interest.
Credit card companies usually charge a balance transfer fee between 3% and 5% for this service, though you may be able to find a select number of cards that don’t charge a balance transfer fee.
In addition to balance transfer fees, you’ll also need to consider the regular interest rate that will kick in if you don’t pay off the total transferred balance by the end of the introductory period. If the post-intro APR is high and you haven’t paid down the debt, you could end up right back in the same debt situation you’re in now.
Finally, be aware of balance transfer credit card limits. Like traditional credit cards, balance transfer cards have a credit limit — a max amount of debt you can put on the card before you’re cut off, so to speak. If your existing debt is greater than the credit limit of the balance transfer…
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