If you’ve got credit card debt, a balance transfer credit card can be a great option. The right card gives you a chance to pay down your debt—or even pay it off entirely—while paying little or no interest expense.
Before you take the plunge for a balance transfer, though, it’s a good idea to have a working knowledge of the process. The more you know, the more likely your balance transfer will be a success.
So let’s start by taking a look at how a basic balance transfer works. Now, the details might vary by credit card issuer, but this will give you a general idea of what happens after your application for a balance transfer credit card is accepted.
Let’s say you want to transfer a $10,000 balance from your old credit card, which we’ll call Credit Card A, to your new balance transfer card, which we’ll call Credit Card B.
After you make the request, your new credit card issuer pays $10,000 to your old bank. This pays off your balance on Credit Card A.
When your new credit card issuer (Credit Card B) notifies you that the balance transfer is complete, you’ll want to follow up with your old issuer (Credit Card A) to confirm it. Make sure that the balance on Credit Card A is zero before you stop making payments.
When the transfer process is complete, you start making payments on your $10,000 balance, which is now on Credit Card B. And if you’ve done a good job choosing your credit card, you’ll be making interest-free payments during the introductory period.
This probably sounds simple enough, but balance transfers can actually be a little tricky. But don’t worry. Everything you need to know to make a successful balance transfer is right here in this handy guide.