Balance Transfer Credit Cards

A balance transfer is a process of when you repay existing high-interest debt with a new lower interest rate credit card. This allows for your payments to be applied to principal balance each month rather than interest charges. This may help you eliminate your card debt faster.

If you are able to find a new credit card with a very low-interest rate, little or no balance transfer fee, a credit limit high enough to accommodate your previous balance and an introductory period long enough to pay off the balance before the rate increases, then a balance transfer is a good idea.

Most credit card issuers charge between 2% and 5% of the balance as the fee for the transfer, with a minimum fee of about $5. You will usually see this fee show up separately from the transferred amount on the statement of the card you transferred the balance to.

Balance transfers don't always save you money. Depending on how much you owe, your current interest rate, and the cost of transferring the balance (the balance transfer fee), it may not be worth it.