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Originally published August 26, 2020. Updated October 26, 2026.
What is a balance transfer? It is a way to move credit card debt onto a new card, usually one with a low promotional rate. The CFPB describes a balance transfer as moving what you owe from one card to another, sometimes for a fee.
What Is a Balance Transfer and What Does It Cost?
How does a balance transfer work?
You apply for a new card with a promotional rate. The new issuer pays off the old card, and the debt moves to the new account. The old card shows a zero balance. The new one shows what you owe, plus any fee.
What does a balance transfer fee cost?
The CFPB says the fee is usually a percentage of the amount you transfer, or a fixed amount, whichever is more. A card can charge that fee even on a zero percent offer.
What happens when the 0% period ends?
An introductory rate has to last at least six months, unless you are more than 60 days late. When it ends, whatever is left costs the regular rate, which can be much higher. Our look at the average credit card APR shows how much.
Is a 0% APR the same as deferred interest?
No. In the CFPB’s explanation of promotional offers, a true 0% deal adds no interest on the promotional balance. Deferred interest works differently, and if you miss the payoff date you could owe more than you expected.
A Balance Transfer Example With Real Numbers
Say you move $3,000 to a card with a 3% fee and 0% interest for 15 months. The 3% is an assumption for this example. Card terms vary. The fee is $90, so the new balance is $3,090. Pay $206 a month and the debt is gone in month 15, with no interest.
Now say you pay only $150 a month. After 15 months you have paid $2,250 and $840 is left. At an assumed 21% APR, that $840 costs about $14.70 in interest the first month.
Editor’s Take
A balance transfer is a deadline with a fee attached. Divide the new balance by the number of promotional months before you apply, and set up a payment that matches. If you cannot make that payment, the transfer saves much less than the ad suggests.
