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One of the primary reasons individuals get credit cards is for a ‘balance transfer’. A balance transfer is the process of transferring an existing balance on a current card (or cards) to a new credit card. There are two primary reasons for transferring a balance. Firstly, the new card may have a lower interest percentage which will save the cardholder money in the long-term. Secondly, the card may have an ‘interest free’ period which will result in no interest for an extended period of time. Thousands of Americans perform balance transfers every year in order to escape the clasps of high-interest credit card debt.

When cardholders get their first credit card they are often only able to sign up for cards with relatively high interest rates. This is because lenders see them as risky borrowers. On the other hand, this means that as a borrower you may rack up debt that then continues to expand because of interest rates that are much higher than normal. Transferring your current balance to another card can help alleviate the stress of accumulating interest. If you can be disciplined enough to take advantage of ‘interest free’ periods, this can be an extremely useful way to get out of debt. This article will overview some of the things to look for in a good balance transfer credit card. In addition, it will outline some of the advantages and disadvantages of balance transfer credit cards.

What to Look For

When deciding on the best balance transfer credit card there are three primary things to look for: APR (interest rate), ‘interest free’ period, and balance transfer fee.

  • APR (Interest Rate) – This is one of the first things you should look at when deciding on a balance transfer card. Many people currently pay over 20% interest on their credit card balances. A good card to balance transfer to is one that has an interest rate in between 10-15%. You may also look to find a card that has a grace period on interest on new purchases. This way if you continue to use the card, you won’t rack up interest on your new purchases for a few months.
  • ‘Interest Free’ Period – An ‘interest free’ period pertains to the balance that you have transferred from an old card. For example, you may currently have $10,000 in credit card debt on a credit account for which you pay 24% interest. If you transfer this to a card with an ‘interest free’ period, you may have a number of months where you pay no interest at all, and therefore may be able to pay off a sizeable chunk of your debt quickly. Good ‘interest free’ periods are normally anything between 12 and 18 months.
  • Balance Transfer Fee – Most cards will charge you a one-time fee to transfer over your balance from another card. Good balance transfer cards will have a one-time fee between 1-3% — don’t accept anything higher.

You should also factor in annual fees. Plenty of reputable balance transfer cards in the U.S. don’t charge annual fees — it’s a good way to help pay off your debt quicker.

The Advantages

The primary advantages in balance transfer cards is the elimination of debt. It allows you to have breathing room that you may not have previously been afforded. Balance transfer cards also put you in a position to avoid debt in the long-term, as many of them have low interest rates.

The Disadvantages

The disadvantages of a balance transfer card come in two forms: credit score reduction and lack of benefits. In terms of credit score reduction, this isn’t always the case. But applying for new credit cards does impact your score, and if you have to apply for multiple, it can put a serious dent in your history for the near future. In terms of the lack of benefits – most balance transfer cards don’t offer rewards or points. This may not be an issue for you, but it means you don’t get any benefits from spending money on your card.


Transferring your balance through a balance transfer card can be overwhelmingly rewarding for those who currently have high amounts of debt. But those who do transfer their debt to a balance transfer card should be aware that they should take time to research which the best card on offer is prior to applying. Applying to multiple cards at once can negatively impact your credit score.