Balance transfer
Also known as: BT
Moving debt from one credit card to another card — usually one offering a promotional 0% APR window — to save on interest. Subject to a balance transfer fee (typically 3–5% of the transferred amount) and conditions about how long the promo rate lasts.
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A balance transfer is a settlement transaction: the new card issuer pays off your existing balance with another lender, and you now owe the new issuer the same principal under different terms. The reason to do it is the promotional 0% APR window that competitive balance transfer offers carry — typically 12 to 21 months, sometimes longer — during which no interest accrues on the transferred balance. The arithmetic is straightforward: if you owe $5,000 at 25% APR on an existing card and you can transfer it to a card offering 18 months at 0%, every dollar you pay down during that window goes to principal rather than interest.
The cost to access this offer is the balance transfer fee, almost always a percentage of the transferred amount. Typical 2026 US ranges are 3% to 5%, with 3% common on premium offers and 5% on lower-end offers. On a $5,000 transfer, a 3% fee is $150 and a 5% fee is $250. The fee is added to your balance on the new card; the promotional APR usually applies to the fee as well as the transferred principal. The break-even calculation is mechanical: divide the fee by the monthly interest you were paying on the old card to get how many months of 0% APR you need to come out ahead. At a 25% APR on $5,000, monthly interest is roughly $104; a $150 fee is recovered in less than two months. The math almost always works for high-APR balances on cards you cannot pay off within a few months.
The trap with balance transfers is the post-promotional period. When the 0% window ends, the unpaid portion of the transferred balance reverts to the card's standard purchase APR, which is often 20–30%. If you have not paid the full balance off by then, you are back where you started — except now you have spent the transfer fee. The discipline required is to plan your monthly payment as (transferred balance + fee) ÷ promotional months, and execute it. Some issuers also retroactively charge interest from the transfer date if the balance is not paid in full by the promo end, a deferred-interest structure more common in store credit than in major-issuer balance transfer offers, but worth reading the terms to verify.
Some other operational notes. Transfers between cards from the same issuer are typically not allowed — Chase will not transfer a Chase balance, Citi will not transfer a Citi balance. The promotional offer usually expires shortly after card opening (60 to 120 days), after which standard transfer rates apply. Balance transfers do not earn rewards. And critically, the new card's purchase APR applies to any new purchases you make on the card during the promo window if you are carrying the transferred balance; the standard advice is to use the BT card only for the transferred debt and not for new charges until the promo balance is paid off.
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- APR (Annual Percentage Rate) APR is the annualized cost of borrowing, expressed as a percentage, that includes both the nominal interest rate and certain mandatory fees. For credit cards, it is essentially the interest rate; for installment loans, it bundles in origination fees and points.
- MSR (Minimum Spend Requirement) MSR is the amount of qualifying spending a new cardholder must complete within a defined window — usually 3 months — to unlock the credit card sign-up bonus. Failing to hit the MSR forfeits the bonus entirely.
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