Transferring a balance from a credit card with a high interest rate to a card with a low interest rate makes financial sense. If you have a good credit score and discipline, you can use a promotional 0% annual percentage rate period to pay off high-interest debt faster and less expensively than you would by making payments on a credit card that charges the regular APR.
But should you make multiple balance transfers to new cards that offer low interest rates? Should you keep moving debt from one account to another? Numerous balance transfers come with costs and risks, including multiple fees and limited promotional interest rate periods. Here’s everything you need to know about making multiple balance transfers to avoid paying interest.
What is a balance transfer?
A balance transfer lets you move an outstanding credit card balance from a card with a high APR to another one with a lower APR. In the best-case scenario, you transfer your balance to an introductory 0% APR credit card that won’t charge any interest for a set period of time -- typically between nine and 21 months. That will give you some breathing room to pay down your balance without accruing burdensome interest charges.
Once the promotional period ends, however, you’ll be subject to the card’s regular APR. The average credit card APR currently stands at more than 20%, according to CNET’s sister site Bankrate.
But credit card interest rates can be even higher. A high interest rate will increase your balance and eat into the monthly payments you make, reducing your ability to chip away at your debt. The lower your APR, the more quickly you can pay off your debt and the more money you’ll save over time.
However, balance transfers nearly always require you to pay a fee. Credit card issuers typically charge between 3% and 5% for a balance transfer, with a $5 or $10 minimum. Still, in cases where you’re moving your balance to a 0% APR card, the 3% balance transfer fee may be less than what you’ll pay in one month’s interest with a high APR card. There are credit cards with no balance transfer fees, but their introductory APR periods are usually considerably shorter, so you’ll have to weigh the pros and cons of your specific situation.
Can you repeatedly transfer credit card balances?
It’s possible to transfer your balance to another introductory 0% APR card once the promotional period for your existing card ends. But you’ll need to maintain a good credit score to qualify for a series of introductory APR cards, be disciplined in making all of the minimum payments promptly and time your transfers carefully.
If you can take advantage of 12 months at a 0% introductory APR, the 3% balance transfer fee may be a low price to pay compared to the interest charges on a typical credit card or personal loan. A promotional credit card APR can be one of the least expensive ways to finance your debt.
But if you’re transferring your balance to a card without an introductory 0% APR, it’s unlikely to be worthwhile. The balance transfer fee may be higher than the interest charges you would have accrued. It’s also worth noting that each time you apply for a new credit card, your credit score can take a small hit. And each credit card you acquire increases the potential for even more debt.
Should you transfer a balance multiple times?
Transferring a credit card balance multiple times is risky. Though it can help reduce the cost of paying off debt or financing a big-ticket purchase, it can quickly turn into a disaster if you end up adding to your overall debt. If you don’t have excellent credit and aren’t confident in your ability to manage your finances, you may be better off applying for a personal loan to consolidate your debt and streamline your monthly payment responsibilities.
Can you transfer more than one balance to a 0% APR card?
You can transfer multiple balances to a single 0% introductory APR credit card, as long as your credit limit can accommodate the combined balance (plus transfer fees). This can help you simplify your monthly payment, especially if you already have multiple credit cards with revolving balances.
Pros and cons of balance transfers
Pros
Low-cost financing with introductory APRs.
Predictable minimum payments.
Quicker debt payoff.
Cons
Balance transfer fees.
Accumulation of new debt.
Multiple credit card applications can hurt credit score.
To see specific recommendations, check out our best credit cards for balance transfers.
What to keep in mind with balance transfers
If you’re considering using multiple balance transfers to pay off credit card debt, here’s what you should consider:
- Do you have a plan to pay off your current debt? You should have a timeline in place to pay off your balance before you apply for another credit card.
- Calculate whether the balance transfer will actually save you money. If you’re not transferring to a card with a low enough interest rate, you may be better off trying to make larger payments in the short term rather than having to pay the balance transfer fees.
- Can you avoid accumulating new debt? If you continue to make purchases and your credit card balance is still increasing, the benefits of the balance transfer won’t help much. It could just lead to a cycle of continually transferring balances and piling on more debt. Plus, new purchases may not qualify for the introductory APR.
- Monitor your credit score. Opening new credit cards within a short period of time will decrease the age of your credit accounts, which could hurt your credit score. On the other hand, additional credit cards could increase the amount of credit available to you. If you’re disciplined enough to not use the new credit card, you could decrease your credit utilization, which could raise your credit score. Be sure to check your credit score regularly for changes.
- You still need to make minimum payments. Even though you may not be accruing interest during a balance transfer’s promotional period, you still need to make at least the minimum payments each month. Most 0% APR offers include hefty fees for late payments and a higher penalty APR if you miss payments. Depending on the issuer’s terms, you could start accruing interest on your balance immediately if you miss a payment.
FAQs
So long as you stick to the rules of the promotional periods, you can transfer your balance back and forth among cards from different banks. However, credit card companies won’t let you take advantage of balance transfer offers between cards from the same issuer. In theory, you can transfer balances between different issuers’ cards as many times as you like, but the balance transfer fees may start to eat into any savings a lower interest rate may offer.
Yes, you can have multiple balance transfer cards. If transferring your entire balance to one card would push you too close to your credit limit, you can split the balance transfer between two cards. Or you may want to use varying introductory periods to plan out your payments and strategically pay off your debt.
You can use a promotional balance transfer offer from your credit card issuer, even if you are currently carrying a balance, but it’s important to read the details of the offer. For example, don’t expect the promotional interest rate to apply to your current balance. You’ll likely continue to accrue interest at your credit card’s current APR. Only the amount you transfer from another card will qualify for the promotional rate, and you’ll still need to pay the balance transfer fee on the amount you’re moving. After you’re approved for the offer, you’ll need to provide your credit card issuer with your other credit card account information, including the name of the credit card issuer, your account number and the amount you want to transfer.
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