What Are Balance Transfers Here’s All You Need to Know
                     WHAT ARE
BALANCE
TRANSFERS?
HERE’S ALL 
YOU  NEED TO 
KNOW
Moving your current debt from one credit card to 
another is  known in finance as a balance transfer. 
People usually resort to  this transaction to benefit 
from lower interest rates (or other  advantages) 
offered by the new card provider.
Balance transfer credit cards allow you to consolidate 
your  outstanding debt on multiple credit cards onto a 
single one. This  way, you can pay back your debt faster 
and at a lower cost.
To answer the question “What are Balance Transfers?” in 
greater  detail, we have reviewed their features, as well 
as their risks and  alternatives.
0% Interest During The Initial 
Period
This is the main reason most people apply for a 
balance  transfer credit card. During the first 10 to 
20 months, you  won’t pay any interest on the debt. 
In this period, you won’t  add new borrowing costs. 
You will only repay previously  accumulated debt. 
The length of this introductory period  depends on 
your card provider.
Normal Interest After The Initial 
Period.
When the introductory period has passed, you will pay 
a normal  interest rate on your debt. Based on the 2021 
Consumer Credit  Card Market Report, the APR on 
credit cards were:
between 16% and 18% for FICO scores above 740
between 20 and 22% for FICO scores in the 670-
739 range  between 22 and 24% for FICO scores in 
the 580-669 range  above 24% for FICO scores 
below 680
Balance Transfer 
Fee
Usually, you have to pay a fee when transferring your debt from 
one credit  card to another. This can be between 3% and 5% of 
the transferred sum. A  fee can be very impactful when you are 
transferring large sums. If your  outstanding debt (across all cards) 
is $10,000, a 3% transfer fee means a  transfer cost of $300.
Some providers don’t charge transfer fees because they hope this 
will  attract more customers. However, make sure there aren’t 
other downsides.  Many creditors offer shorter introductory 
periods with a higher interest  rate after this period ends.
Annual 
Fee
Many creditors that offer balance transfer cards charge annual 
fees. There  are some creditors that do not charge annual fees, 
but fees can run up to
$90 or more per year just for having that type of account.
Provider
Generally, it’s not possible to transfer balances between credit 
cards issued  by the same institution. Therefore, it’s better to 
look for new providers  when applying for a balance transfer 
credit card.
Is There An Upper Limit For Balance  
Transfers?
Like any credit card, a balance transfer credit card has a credit 
limit. How  much you can transfer from other credit cards is 
usually a percentage of  this limit.
Let’s say your credit card limit is $10,000, and the balance 
transfer cap is  set at 80%. This means that you can only transfer 
up to $8,000 from your  older credit cards. If your current 
outstanding debt is higher than that, you  will have to pay it back 
some other way.
What Can I Do If M y Credit Limit 
Is Too  Low?
In this case, the most obvious option is to transfer the 
maximum amount  possible to your balance transfer credit 
card. This would allow you to  benefit from the introductory 
period for at least a part of your  outstanding debt.
Alternatively, you can ask your new card provider to increase 
your credit  card limit. As we mentioned earlier, their approval 
(or lack of) will depend  on your current income situation as well 
as your creditworthiness.
THANK YOU
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