If you are working to reduce your credit card debt, a balance transfer to another credit card can be an effective way to reduce your interest payments as you reduce your credit card balances.
Balance transfers allow you to move outstanding debt from a card with a higher APR to a card with a lower APR. By doing so, they can help you keep your credit card interest payments at manageable levels and establish healthy credit habits that can improve your creditworthiness.
Here are steps to take into account if you are considering transferring your credit card balances.
1. Consider any balance transfer options on your existing credit cards
Check the APR for balance transfers on each of your existing credit cards and look to see if you have any balance transfer offers available on them. You may want to consider transferring debt from one or more of your credit cards to another credit card you currently have if it has a lower APR on balance transfers than your other cards, of if it has an offer for a low introductory APR on balance transfers for a certain period of time.
Credit cards will have a limit on the amount of debt you can transfer. The maximum amount you can transfer could be the credit limit on your card. For other credit cards, the maximum amount you can transfer may be lower than the credit limit on the card. Still, you typically cannot transfer more than the credit available on the card at any given time. For example, you cannot transfer a balance greater than $1,000 onto a card with $1,000 of available credit. The amount you can transfer may be further reduced by any fee that applies to the balance transfer.
When considering transferring debt to an existing credit card, make sure you know how much credit you have available on your chosen card.
2. Weigh offers for new balance transfer cards
In addition to looking at your existing credit cards, check to see if you have any pre–qualified offers for a new balance transfer credit card. Balance transfer credit cards offer a low introductory rate on balances transfers for a certain period of time. Compare any pre-qualified offers you have with other new balance transfer credit cards by checking online or with your current card issuers. Consider any introductory rates on balance transfers (and how long those rates will last), any fees assessed for each balance transfer you make, and the APR that will apply after the introductory rate expires.
3. Select the best balance transfer card available to you
Now, you should have a list of terms for both your existing credit cards and other balance transfer credit cards you are considering applying for. This will help you to select the best balance transfer offer available to you.
Selecting one of your existing cards for a balance transfer
If one of your current credit cards offers you similar or better balance transfer terms than any pre-qualified offers or other offers for new balance transfer credit cards, it may be easiest to transfer your balance within your existing credit card portfolio instead of applying for a new card.
Selecting a new balance transfer credit card
Remember, when considering a new balance transfer credit card, it’s helpful to try to find the lowest introductory APR you can for the longest period of time. You should also consider any balance transfer fees and the APR that applies to the balance transfer after the low introductory APR expires.
If none of your existing credit cards have terms as good as a new balance transfer credit card you are considering, then applying for the new balance transfer credit card may make sense.
Pay attention to when any low introductory APR period on balance transfers expires since a higher APR will start applying to the balance after this period ends. Try to pay off as much of your transferred debt as possible before the end of the low introductory APR period.
Citi offers an array of credit cards that feature balance transfer offers, including the Citi Simplicity® Card, Citi Double Cash® Card, Citi® Custom Cash® Card, Citi Rewards+® Card and Citi® Diamond Preferred® Card, and you can learn more about our balance transfer credit card options here.
Be aware of balance transfer fees
If one of your current credit cards offers you similar or better balance transfer terms than any pre-qualified offers or other offers for new balance transfer credit cards, it may be easiest to transfer your balance within your existing credit card portfolio instead of applying for a new card.
4. Transfer your balances
The actual act of transferring your balance is usually simple: the issuer of the credit card you are transferring the balance to will collect the information about the balance you are moving and will process the transaction on their end. You may be able to complete this process online or through your credit card's app.
5. Pay down your credit card debt
One key condition of a balance transfer is that they will expect on-time payments each month as scheduled. Missing one payment could mean that any introductory APR can be taken away, putting you back at square one with a high APR.
While reducing your interest payments may be your main goal for initiating a balance transfer, you should look to manage your debt more efficiently going forward by paying off as much as you can. You should also keep in mind that interest may be charged on the purchases you make with the credit card unless you pay the full statement balance, including the entire amount transferred to that card, by the due date each month. So it’s important to check the terms of your credit card and avoid unnecessary expenses as you focus on paying off your debt.
Disclosure: This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.
