Are Balance Transfers Worth It?

If you’re carrying debt on high-interest credit cards, a balance transfer might seem like the perfect solution. By transferring your balance to a card with 0% interest for a certain amount of time, you can save money on interest and pay off your debt faster. But are balance transfers worth it? In this article, we’ll take a comprehensive look at how balance transfers work and help you determine whether they’re the right choice for you.

Are Balance Transfers Worth It?

What Is a Balance Transfer?

A balance transfer is when you move your existing credit card debt to another credit card with lower interest rates or 0% interest for an introductory period. This allows you to save money on interest charges and pay down your debt more quickly.

Usually, there’s a fee associated with balance transfers, which is typically around 3-5% of the transferred amount. For example, if you transfer $10,000 in credit card debt and the fee is 3%, then you will have to pay $300 upfront.

How Do Balance Transfers Work?

Let’s say you have $10,000 in credit card debt with an APR of 21%. You decide to transfer this balance to a new credit card that offers 0% interest for the first 12 months. You’ll pay a one-time transfer fee of $300 (3% of $10,000).

Now, instead of paying 21% APR on your original credit card, you’ll pay no interest on the transferred balance for the first year. During this time, every payment goes directly toward paying off the principal amount owed.

At the end of the introductory period (in this case after 12 months), any remaining balance will start accruing interest at the standard rate set by the new credit card issuer.

Are Balance Transfers Worth It?

Whether or not a balance transfer is worth it depends on several factors:

The Interest Rate You’re Currently Paying

If you have high-interest debt, such as credit card debt, a balance transfer can be an excellent way to save money on interest charges. However, if you’re already paying a low-interest rate (such as with a personal loan), a balance transfer may not be worth the fees and hassle.

Your Ability to Repay the Balance Before the Introductory Period Ends

Make sure you can pay off your transferred balance before the introductory offer expires. Otherwise, you’ll start accruing interest on any remaining balance at the new card’s standard rate.

The Fees Associated With Balance Transfers

As mentioned earlier, most balance transfers come with a fee of around 3-5% of the transferred amount. Be sure to consider this fee when determining whether a balance transfer is worth it for your situation.

Your Credit Score

When you apply for a new credit card to complete a balance transfer, your credit score is one of the factors that determine your eligibility and the interest rate you receive. If your credit score is low, you may not qualify for lower rates, and it may not be worth applying for another credit card.

Pros and Cons of Balance Transfers


  • You can consolidate multiple high-interest debts into one payment.
  • You can save money on interest charges.
  • You can pay off debt more quickly.
  • You only have to make one monthly payment instead of several payments.


  • There’s usually an upfront fee associated with balance transfers.
  • Your credit score could take a hit if you apply for multiple new credit cards.
  • The standard APR after the introductory period may be higher than your current rate.
  • You might end up putting more charges on your old card(s) which will defeat the purpose of transferring in first place.

Alternatives to Balance Transfers

If a balance transfer doesn’t seem like it’s worth it or isn’t an option for you, there are other options to consider:

Debt Consolidation Loans

If you have multiple debts with high-interest rates, another option is to consolidate them into a single personal loan with a lower interest rate. You’ll pay off your existing debts and only have one monthly payment on the new loan.

Snowball Method

The snowball method involves paying off your debts starting with the smallest balance first. Once that debt is paid off, you move on to the next smallest balance while continuing to make minimum payments on your other debts. This method can help you build momentum and stay motivated as you see progress.

High Yield Savings or Money Market Accounts

While not an immediate solution like balance transfers or loans, putting extra money in a high-yield savings or money market account can earn interest instead of paying interest. Over time this could make up for lost ground if none of the traditional choices are suitable for you.


So, are balance transfers worth it? Balance transfers can be helpful in saving money on interest and paying down debt faster, but they’re not always the best option for everyone. Consider factors such as your current interest rates, fees associated with balance transfer cards, your credit score, ability to repay before the introductory offer ends before deciding which option makes sense. Make sure you weigh all of your options and choose what’s best for your unique financial situation.


Are balance transfers worth it for saving money on interest?

Yes, balance transfers can save you money on interest if you transfer high-interest debt to a card with a lower interest rate. However, you need to consider the transfer fee and make sure you can pay off the balance before the introductory period ends.

Can I transfer all my credit card balances onto one card?

It depends on the credit limit of the new card and the total amount of your outstanding debts. You may not be able to transfer all of your balances if they exceed the available credit limit.

Do I need good credit to qualify for a balance transfer card?

Generally, yes. Balance transfer cards usually require good or excellent credit scores to qualify because it’s a risk for banks to allow you to consolidate your debts into one account.

How long does it take to complete a balance transfer?

It typically takes 7-10 business days after approval for a balance transfer to be completed. During this time, continue making payments on your original account until you receive confirmation that the balance has been transferred.

What happens if I don’t pay off my entire transferred balance before the introductory period ends?

If you don’t pay off your transferred balance before the introductory period ends, any remaining balance will start accruing interest at the regular APR, which could negate any savings from transferring in the first place.

Can I use a balance transfer card for purchases as well as paying off debt?

Yes, but keep in mind that purchases made on a balance transfer card will likely accrue interest at a higher rate than your transferred debt, so it’s best to avoid using it for additional purchases while paying down your transferred debt.

Should I cancel my old credit cards after transferring their balances?

It’s not necessary to cancel your old cards unless they have annual fees or you’re unable to resist the temptation of using them and accruing more debt. However, closing accounts can negatively affect your credit score, so use caution before deciding to do so.

What should I consider before applying for a balance transfer card?

You should consider the balance transfer fee, the introductory APR period, the regular APR after the introductory period ends, and any other fees associated with the card. It’s also important to make sure you can realistically pay off your transferred debt within the introductory period.

Can I transfer debt from a personal loan or car loan onto a balance transfer card?

No, balance transfers are limited to credit card balances only. You cannot transfer installment loans like personal loans or auto loans onto a balance transfer card.

How many times can I use a balance transfer offer?

You can technically use a balance transfer offer as many times as you want by opening new cards with similar offers. However, opening too many new accounts in a short amount of time can negatively impact your credit score.

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