Weighing the Advantages and Disadvantages of Balance Transfer Credit Cards

October 17, 2018

By Sherry Keyles

Credit cards are very convenient for consumers but they can also bring problems – namely debt. Today, American consumers carry an average of $5,700 ($9,300 per household) in credit card debt. Compounding the problem, many consumers carry their debt on multiple credit cards - nearly a third of consumers have debt spread across three or more credit cards.

Consolidating your credit card debt from multiple cards to one single credit card can help you simplify your finances and enable you to pay off your debt quicker. Balance transfer credit cards are designed for the purpose of shifting multiple credit card balances to a single card – often with a 0% APR introductory period.  Balance transfer credit cards can reduce the interest you pay on your total credit card debt, effectively lowering your monthly payments and saving you money on finance charges.

Before you consider consolidating your credit card debt with a balance transfer card, make sure you understand both the advantages and disadvantages.

Balance Transfer Card Advantages

Save Money on Interest – While offers vary by issuer, promotional 0% APR offers typically last 12 months. During this period, you can focus on paying down your transferred balance without accruing interest.

Simplify Finances – Make one monthly payment instead of making multiple payments to several credit card companies. Only having to Tracking one credit card payment every month decreases the chances of missing a payment due date.

Better Terms - If your current credit card has bad terms – high fees or a short grace period– you can move your balance to a credit card with better terms.

Comparatively Low Risk - Moving your high-interest debt to a balance transfer credit card holds fewer risks than other consolidation options such as a home equity line of credit. If you are unable to make payments, you could lose your house.

Additional Perks - Certain cards include rewards programs such as cash-back awards or airline miles

Balance Transfer Card Disadvantages

Limited Introductory Period – 0% APR offers are only temporary. If you don’t pay off the entire debt before the rate expires, your balance may be subject to a much higher rate.

Transfer Fees - Balance transfer cards typically charge a fee for every balance transferred – either a percentage of transfer or a flat fee

Not Everyone Qualifies - Good or even excellent credit is usually needed in order to qualify for a zero-percent offer. Most banks and credit issuers require a FICO score in the 700 range or better. Even if you are approved, the credit line may not be as large initially advertised.

0% Offer Not Available for Purchases – Many balance transfer cards do not extend the 0% APR offer to new purchases. If you buy things with the new card, you add to your debt and have two balances on your card - the transferred balance at zero percent interest and the new purchase balance at a higher rate.

Timing - The balance transfer can take up to two weeks to process, so you'll need to continue making payments on your old card during that time, if any are due.

Keep in Mind

Be careful about using a balance transfer card to make purchases, as you would with a regular credit card. Debt consolidation should be your primary concern.

Avoid adding to the balance you’ve transferred. The purpose of obtaining a card with an introductory 0% APR to erase the debt you’ve built up on another card.

Read the fine print and ensure you understand all the balance transfer card’s terms to avoid losing all the savings you hoped to get from the transfer.

Transferring a balance doesn’t eliminate your debt. You still have to pay off the outstanding balances you’ve transferred to the new card.


Using a balance transfer credit card is one of the most common ways to consolidate credit card debt. Before applying for a card, consider how transferring the balance will affect your finances in the long-term. If you will ultimately save money and pay off your credit card balance faster, then transferring the balance is worth it.

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