How to Do a Balance Transfer

Anyone who's carrying a balance on a high-interest credit card can benefit from a balance transfer. If you qualify for a transfer, it's likely you'll receive several offers. But while it is relatively easy to do a balance transfer, realizing the benefits requires discipline. If not done carefully, a balance transfer will only delay or worsen the negative consequences of having too much debt.

Instructions

1

Read offers carefully. Before applying for and completing a balance transfer, read all offers completely and carefully. Usually the lowest interest rate is what you're looking for, but you'll also need to be aware of fees or conditions. Make sure the offered rate is guaranteed, not dependent on your credit score, and be clear on the duration of any introductory or so-called "teaser rates."

2

Submit your application. Most balance transfer offers can be completed online, but paper mail-in applications are available as well. Unless the transfer is to an existing line of credit, the application will include the kinds of questions that appear on any request for new credit, such as employment and income. Additionally, the application will need the amount of the balance to be transferred, the name of the creditor and the account number.

3

Continue payments. Until you've received confirmation of the balance transfer, continue making at least minimum payments on the old line of credit. If the transfer does not cover the entire balance, paying off this high-interest debt completely should be your first priority. Once it's paid off, avoid carrying a balance month to month on the old card.

4

Don't use the new card. When a line of credit includes debt that accrues interest at different rates, all payments are counted toward the lowest rate debt. This means that charges to your new credit card can't be paid off until the entire balance transfer is paid off. And, in the meantime, they'll be piling up debt at a much higher interest rate.

5

Pay off the transfer in time. The best use of a balance transfer is to pay off the balance in full before the end of the special rate period. The best offers are for 0 percent interest for a year or more. At the end of this time, the interest can be retroactively added from the date of the transfer.