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The Do’s and Don’ts of Balance Transfers



5 Do’s and Don’ts of Balance Transfers. Balance transfer can be a smart move in your financial planning, if you know what you’re doing.

illustration of credit cards balanced on a seesaw on the beach
Credit card balance transfers

While credit cards are a useful tool, sometimes the APR can prevent even the best of us from paying down a large credit card balance. Balance transfers are a useful way to pay down credit without the crippling APR, if you understand how to do it for maximum effect. 

A balance transfer is the transfer of credit card debt from one card to another. The advantage with a new card is often lower rates for balance transfers, so that you can chip away at your debt without interest piling on. Well, at least for a short time. 

In this article, we’ll explore the ins and outs of balance transfers, including what to do…and what not to do. 

Do Your Homework

When you’re shopping for a new credit card, especially for a balance transfer, it’s important to do your research. With the right card, you can buy yourself up to 18 months of 0% APR to pay down your balance. Looking for a special intro offer will give you the most flexibility, just make sure that offer applies specifically to balance transfers (and not just new purchases). You’ll also want to pay attention to the APR after the introductory offer ends, as that’s the rate you’ll be paying if you still carry a balance. This is especially important if you plan on using the credit card in the future. 

Here’s what else you’ll want to be aware of when shopping for a credit card:

Don’t Jump at the First Card

Just because you’re pre-approved for a card does not mean it’s the right card for you. The above criteria should be your first litmus test for compatibility. If your goal is a balance transfer, you’ll want a card that allows you to do a balance transfer and reduce debt with the lowest fees and rates possible. 

And if you’re looking to improve your credit score, it’s important that you apply for as few cards as possible. Before applying, check to see if you’re qualified for the credit card you want. Make a list of the cards you’re most interested in and qualified for, to eliminate inquiries on your credit report. 

Do Have a Plan

Using a balance transfer as a debt reduction strategy requires discipline to be effective. Before committing to anything, have a plan. Consider the following questions as you map out your debt reduction strategy:

It’s important to dedicate time to thinking about these questions if reducing debt is important to you. Knowing how you will accomplish your goals (rather than just the goal itself) will ensure that you succeed. 

Don’t Bite Off More Than You Can Chew

Credit card debt can be overwhelming, and it happens to the best of us. After all, sometimes life happens, and credit cards are there to ease the burden of unexpected expenses. In other scenarios, credit card debt results from poor spending habits. If you’re considering a balance transfer, it’s important to be extremely candid with yourself. 

For some, balance transfers provide the structure and motivation to reduce debt. For others, a new credit card exacerbates some of the habits that led to high debt in the first place. Regardless of the reason behind your debt, the most important factor is that you commit to debt reduction in the best way for you

Do Remember to Breathe

When debt threatens to overwhelm, remember to breathe. Climbing a mountain happens one step at a time. Debt is the same—while it’s difficult to tackle overnight, consistent effort will help you win in the long run. Be gentle with yourself, and stay on course. 

If you’re ready to say goodbye to high credit card debt, and get out from under those high interest rates, a balance transfer may be right for you. 

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