If you’re wondering how credit card balance transfer work, you’re probably looking to move some of your high-interest debt to a card with a lower interest rate. This is a common debt consolidation strategy and could help you save a significant amount of money in interest.

Credit card companies don’t all approach balance transfers the same way. Some companies complete balance transfers electronically, while others issue balance transfer checks directly to you, the account holder, which you then mail to the cards you’re paying off. Some credit card issuers may also allow you to transfer your debt from a student loan, a personal loan, an auto loan or a home equity line of credit.

American Express says that it typically takes anywhere from five to seven days for a transfer to be completed, but adds the process can take up to six weeks. Decisions about balance transfers are sent through the mail.

Discover says it typically processes balance transfers in seven days, or 14 days on new accounts. Discover also mentions that if the creditor needs to be paid by a check instead of electronically, the process can take even longer. The company recommends filling out a balance transfer application online to shorten the process.

For cards that operate on the Visa or Mastercard networks, the length of time for a balance transfer varies by the financial institution issuing the card. Capital One, for example, says that it usually takes three to 14 days for a transfer, but the time period depends on whether the transfer takes place electronically or by mail.

Furthermore, most credit card issuers will impose a balance transfer fee, typically 3% to 5% of the amount transferred.

• How long does a Credit Card Balance Transfer take?
• When Does It Make Sense to Transfer a Balance?
• How Do You Get a Balance Transfer Credit Card?
• Why do Credit Card Balance Transfers take so long?
• Do Balance Transfers Affect your Credit Score?
• Is it Smart to Transfer a Credit Card Balance?
• Does a Balance Transfer Happen Automatically?
• Do you have to Close Credit Card after Balance Transfer?

How long does a Credit Card Balance Transfer take?

A credit card balance transfer typically takes about five to seven days, but some major card issuers ask customers to allow up to 14 or even 21 days to complete the transaction. If you’re considering getting a new balance transfer credit card and want to make sure you know how long the transfer will take as well as whether you should even make a transfer in the first place, read on.

Read Also: Best Low-interest Credit Cards

Many credit companies will state how long the balance transfer process takes on their website. If the information is not available online, you can call your card issuer’s customer service.

Average Length of Time for a Balance Transfer
American Express	Typically 5 – 7 days, but longer under certain circumstances
Barclays	Up to 3 weeks, but typically much faster
Capital One	Typically 3 – 14 days
Citi	Typically 2 – 21 days
Discover	Typically 7 – 14 days
Chase	Typically 7 – 21 days

When Does It Make Sense to Transfer a Balance?

When you are able to receive a lower APR on your debt by transferring your balance, it’s worth considering. For example, when a new account offers introductory financing with a 0% APR or a lower than standard interest rate, then it can make sense to do so—as long as you plan to pay off the balance before the introductory period ends.

It can also be beneficial to transfer your balance to a new credit card with a standard APR that’s less than your current card’s rate. And if your credit has improved since you opened your last card, you may be eligible for a lower interest rate on a new account.

On the other hand, a balance transfer may not always be the right move. For example, if you’re on track to pay off your balance within a few months, it may not be worth spending the 3% to 5% balance transfer fee just to receive a lower interest rate for a short period of time. Before you begin the process of performing a balance transfer, you may want to request a lower interest rate from your current credit card issuer.

In addition, if you think you might rack up additional debt on the card you pay off with a balance transfer, then a balance transfer may not be right for you. If your goal is to reduce your debt and the amount of interest you’re paying, put the old cards in a drawer and commit to not using them at least until the transferred amount has been fully paid off.

How Do You Get a Balance Transfer Credit Card?

You must first identify a balance transfer credit card with a 0% APR introductory financing offer for balance transfers, or at least a card with a significantly lower APR than the card you’re using.

You also have to be sure that you can qualify for the new card, based on your creditworthiness. Consumers who have good credit scores and pay their bills on time each month tend to qualify for cards with the best balance transfer offers.

Balance transfers offered by credit card issuers are temporary and range anywhere from six to 18 months. During that period, the interest rates could range from 0% to 4% or higher, depending on the credit card company. The credit card issuer will set the credit limit, which is also the maximum amount that can be transferred.

This includes the fee the company charges to process the transaction, which is often a percentage of the transfer amount, such as 3% to 5%. For instance, if the balance transfer fee is 3% and the credit limit is $3,000, the maximum amount you can transfer is $2,910.

Consider all the features on new balance transfer cards you’re considering, including the standard APR you’ll pay once the intro balance transfer rate ends, fees you’ll pay on the card (such as annual and foreign transaction fees) and card perks.

Keep in mind that it will take time for the new credit card issuer to send a payment to the card you want to transfer a balance from (or for them to send you the payment, which you’ll send to your other card issuers). The entire process can take a couple of weeks or more, so stick to your original monthly budget and be sure to continue paying the bills on your cards until the payoff is complete.

Why do Credit Card Balance Transfers take so long?

It may not be your lender’s fault. Credit card balance transfers don’t just happen automatically when you request them. 

Lenders need time to process your request and, if you’re applying for a new credit card, determine whether you qualify for a balance transfer. Even if you’re approved for a card that advertises a promotional balance transfer offer, you may not be eligible for it. 

Once you’re approved for a balance transfer, your new card issuer will then need to coordinate the transfer with your old lender. That, too, can slow things down, because bank transfers aren’t necessarily instantaneous. Depending on the lender, it may take a few days or more for the funds to change hands. 

If you’re concerned about a slow balance transfer, wait at least a few weeks after your initial request to ask about it. If it’s been longer than the maximum processing time listed in your card’s terms and conditions, reach out to your new lender. 

Be patient. It can take awhile for a transferred balance to change hands. But if you’re transferring your balance to save money, then it should be worth the wait.  

Do Balance Transfers Affect your Credit Score?

A balance transfer could influence three of the five factors that determine your credit score:

• New credit
• Length of credit history
• Credit utilization rate, or how much of your available credit you use

Those factors could be affected at each step of the balance transfer process. That process involves:

Applying for a balance transfer credit card. You can request a balance transfer on most credit cards, including the ones in your wallet, but using a new card is best.

A balance transfer card offers consumers an introductory 0% APR on balance transfers, purchases or both, often for more than a year. This buys you time to chip away at your debt without paying a penny of interest.

When you apply for a balance transfer credit card, the credit card company runs a hard credit check. This hard inquiry may, in the short term, knock up to five points off your FICO credit score. If you are approved for the first balance transfer card you apply for, you likely don’t need to worry about this hard inquiry.

But multiple inquiries for new credit in a short span of time could raise a red flag with creditors and hurt your credit score. The more hard inquiries you have when applying for a card, the more your score could drop.

If you want to avoid this scenario, check your credit score and the card issuer’s website to make sure you have a good chance of approval. Most balance transfer cards require excellent or good credit, which means a FICO credit score of at least 670. You can also seek to prequalify for a card, which can tell you whether you might be approved using only a soft inquiry that doesn’t affect your credit rating.

And if you receive a pre-approved card offer, think about applying for it, as long as the offer is as good as or better than other others you’re considering.

“When credit card companies target you and send you an offer through the mail, the likelihood that you’ll be accepted when you’ve been preapproved is much higher,” says James Garvey, CEO and co-founder of Self Financial, which offers credit-builder loans. That doesn’t mean it’s a guarantee, though.

Opening the account. Once the credit card issuer approves your application and opens your account, the average age of your credit accounts changes, which influences the length of your credit history.

If you have two credit cards – one 10 years old and the other four – the average age of your accounts is seven. The average age would drop to 4.67 years if you opened a new card, and depending on your credit profile, that decrease could hurt your score.

This may be more of a concern for new credit users rather than seasoned users with otherwise stellar credit.

Adding a new line of credit can also affect your credit utilization. For example, let’s say you have two credit card accounts:

• Card A has a $5,000 balance with a $10,000 credit limit.
• Card B has a $500 balance with a $5,000 credit limit.

If you divide the card balance of your cards by your total credit limit, you come up with a credit utilization ratio of 37%.

But if you get a new balance transfer card – Card C – with a $6,000 credit limit, the credit utilization ratio for all three cards is roughly 26%. When it comes to credit utilization, lower is better. Experts say you should aim to use no more than 30% of your available credit.

Making the transfer. The balance transfer itself doesn’t influence your credit score. But keep in mind that credit scores may look at your per-card credit utilization as well as your overall utilization. So if the credit limit on your new balance transfer credit card is lower than the limit on your old card, your score could be affected.

“FICO uses very sophisticated algorithms to determine your likelihood of defaulting,” Garvey says, and a high utilization rate signals that you may have a tough time making your payments.

Closing an account. After you’ve requested a balance transfer, you may consider closing your old account. But even if canceling the account might help you avoid racking up more debt, it might affect the length of your credit history and your credit score.

If you close the account, the card no longer helps boost your average age of accounts. Still, a closed account that was paid as agreed will remain on your credit report for up to 10 years.

Losing the card’s available credit could hurt your score as well.

In the previous example, adding a new card to your wallet dropped your overall credit utilization to about 26%. But if you moved your balance from Card A to Card C – assuming no balance transfer fee, for simplicity’s sake – and closed the first card, your overall credit utilization jumps to 50%.

The higher your credit utilization, the more your credit score could drop. There’s no telling how much, though, says Freddie Huynh, vice president of credit risk at Freedom Financial Network, because the credit score calculation is complex.

“It can be very hard to provide a blanket statement on how a consumer’s score is going to be impacted,” he says.

Adds Garvey: Consider the pros and cons of keeping the card open, including the cost. For instance, does the card have an annual fee, or will you end up taking on more debt? If so, Garvey says to take the credit hit and save money.

Is it Smart to Transfer a Credit Card Balance?

A balance transfer may be a solid debt-repayment strategy, allowing you to save on interest and chip away at your balance over time, but it’s not the best option for everyone. Consider the following to be sure a balance transfer is right for you:

• How much do you need to transfer? Even if you’re approved for a balance transfer card, the credit limit you’re offered may not cover the full balance you want to transfer. If your balance is too big to transfer all at once, you’ll have to decide if it’s best to transfer a portion, apply for multiple cards or work with your existing creditors to get a lower interest rate.
• Do you have a repayment plan? It’s critical that you go into your balance transfer with a plan for how you’re going to pay off your debt and make the most of a card’s 0% introductory APR period or low ongoing APR. Otherwise, you may just find yourself back where you started. Additionally, if you don’t make timely payments, you could lose your 0% APR and may even trigger a penalty APR.
• What got you into debt? You may be motivated to pay off your debt, but if you haven’t addressed what caused you to get into debt in the first place, you may just use your new card to create an even bigger balance. What’s worse, you could end up stuck with a high-interest rate on your new card once the promotional period ends.
• Good credit is required to qualify – To take advantage of the best balance transfer offers, you’ll need good to excellent credit. Instead of trying to do a balance transfer with bad credit, consider a debt consolidation loan or focus on paying down your balances as much as possible before you apply to rebuild your credit score and get better terms.

Here are three good reasons you might consider a balance transfer:

1. You want interest relief on your existing debt.

If you could choose either paying interest or not paying interest, you’d probably choose not to pay. Credit card debt tends to be the most expensive type of debt out there due to double-digit interest rates. With a balance transfer card with a 0% offer, you’ll have anywhere from six to 18 months to pay off your debt without paying interest.

Let’s do the math. Say you have a $5,000 balance and $300 to put toward paying it down each month. Using a balance transfer credit card with an 18-month 0% introductory offer, you’ll pay off your debt in 17 months, interest-free.

But if you don’t transfer your balance and instead choose to keep it on your 18% interest rate card, it will take you 19 months and you’ll pay $698 in interest. Even factoring in a potential 3% transfer fee, you’ll save $548 by transferring your balance.

The biggest caveat: You need to create a plan to pay off your debt in full before the introductory period expires. Some credit cards retroactively apply the interest you would have accrued, if you don’t pay off your balance by this time. And be careful: The credit card issuer isn’t legally obligated to remind you when the end of the introductory period is coming up, so make sure you’re keeping track of it.

2. You want to improve your credit score.

One of the major factors in your credit score is credit utilization. That’s the percentage of your available credit limits you’re using at any given time. Most experts recommend keeping this percentage below 30%.

Transferring your balance can improve your credit utilization in two ways. First, when you transfer your entire credit card balance, your old credit card goes down to a utilization percentage of 0%. This brings down your overall utilization, as long as you don’t run up a new balance on your old card. Credit cards are a great tool, but it’s a good rule of thumb to avoid using them daily until any existing credit card debt is paid off.

Second, if you transfer your balance to a card with a 0% introductory rate, you’ll be able to pay down your debt faster. This improves your utilization more quickly than if you also had to pay interest on your remaining balance.

Nerd note: Applying for new credit – like a balance transfer card – results in a small hit to your credit score. However, this factor is a much smaller component of your score, and the improvement in credit utilization should far outweigh any initial drop due to a new application.

3. Your credit card debt can’t be paid off in six months or less.

Even with existing debt, a balance transfer card isn’t always the best option. For instance, if you have a $2,000 balance, but you can afford to put $750 toward it monthly, you’ll only pay $27 in interest with an 18% interest rate. A 3% balance transfer fee would cost you $60, so it’s smarter to just pay off your debt and eat the small interest payment.

Weigh the cost of the interest you’ll accrue against the balance transfer fee to decide whether or not it’s worth your time and money to transfer. And keep in mind that you can find balance transfer cards without transfer fees if you have good credit.

If you want to save on interest and improve your credit score, you should get a balance transfer credit card this January. Just make sure your credit card debt can’t be paid off in six months or less and the interest you’ll save outweighs the potential balance transfer fee you’ll have to pay.

Does a Balance Transfer Happen Automatically?

A balance transfer usually happens the next working day depending on when you submitted the request. But may take a day or 2 working days to show on your statements. However, here is another thing you need to consider.

A Transfer Can Save you money…

Say you have a $5,000 balance on a credit card with a 20% APR. Carrying that balance is costing you $1,000 a year at this rate. Then, you get a 0% balance transfer offer on a new credit card. You can move your $5,000 balance to the new card and you’ll have a whole year to pay it off with no interest. You just have to pay a 3% fee to transfer the balance, which amounts to $150. (Balance transfer fees typically range from 3% to 5% of the amount transferred.)

Even after the fee, you’ll come out way ahead by not paying interest for a year, as long as you put about $415 per month toward your $5,000 balance so that it’s paid in full by the end of the promotional period.

…Unless You Buy Something Else on That Card

Let’s say you need to spend $150 on toilet paper, paper towels and other household essentials during a routine shopping trip and you charge it to your new card, the same card to which you’ve transferred the balance.

You assume that, if you pay off the $150 when your bill comes due in three weeks, you won’t owe any interest on the purchase—after all, you just made it. And you know you’ll have the money because your financial situation has improved since you racked up that $5,000 balance. You were unemployed then; you have a job now and you’re not taking on new debt, just cleaning up the past. You just charged the purchase to your card for convenience.

But when your credit card statement arrives, you find you’ve been charged 15% APR—your new card’s interest rate on purchases—on your $150 purchase. It’s a small amount, but what if you had charged your child’s college tuition for the semester? Plus, there’s the principle of the thing: If you’re going to pay interest or fees to a credit card company, you want to do it knowingly, not because the company caught you off guard.

The rules governing this process are spelled out in the fine print. Credit card companies used to routinely apply payments to the lowest-interest balances first, in which case any amount over the minimum payment would go toward the balance transfer amount, and any purchase balances would keep sitting there accruing interest at the higher interest rate until paid off.

However, with the advent of the Credit Card Act of 2009 issuers must first apply for payments above the minimum amount due to the highest interest rate balance.

Avoiding the Balance Transfer Trap

If the terms of the grace period for purchases after you do a balance transfer are unclear to you, you have three options:

1. Pass on the offer and look for one with clearer terms.

2. Take the 0% balance transfer offer, but don’t use the card for any purchases until you’ve completely paid off the balance transfer. 

3. Choose a credit card that offers a 0% introductory APR for the same number of months on both balance transfers and new purchases. Numerous such offers are advertised in the market.

Do you have to Close Credit Card after Balance Transfer?

After you complete a balance transfer, it’s essential to follow some guidelines so you can ensure you pay off debt within the introductory 0% APR period. Transferring a balance is only the first step toward becoming debt-free. You’ll need to make consistent, sizeable payments and avoid overspending to rid yourself of debt once and for all.

1. Confirm your old card has a $0 balance

Once you transfer a balance to a new credit card, you might assume that your old card has a $0 balance, but it may not.

“Make sure no last-minute interest or fees hit the old credit card that you transferred the balance from. You’ll want to monitor that card for a month or two, ensuring you have a $0 balance,” Priya Malani, founder, and CEO of Stash Wealth, tells CNBC Select.

This is known as residual interest, which accrues in the time between when your bill was sent and when your transfer was made. Keep an eye on your old card for a couple of months to confirm there’s no balance.

2. Set up autopay for more than the minimum due

“Sign up for autopay to ensure you always make payments on time and commit to paying in full when you can,” Farnoosh Torabi, financial expert and host of the podcast So Money, says.

Autopay is a helpful feature provided by most credit cards that allows you to schedule payments for any amount. Set up autopay for at least the minimum due, but ideally more than the typical $25 or $35 minimum payment.

“If possible, calculate the exact amount you need to pay every month to have the balance paid off before the 0% teaser rate ends and set up a monthly (or biweekly) automation for that amount,” Malani says.

For example, if you transfer a $3,000 balance to a card with no interest for 15 months, simply divide your $3,000 balance by the length of your intro period (15 months). You’ll find you need to pay $200 a month to ensure your balance is $0 before the intro period ends, assuming you don’t make any new charges on the card.

3. Cut costs where possible

When you’re paying off a balance, it’s key to avoid racking up unnecessary charges that can further add to your debt.

“Establish spending thresholds for different expense categories whereby you know you can pay off the balance comfortably. It may also help to detach your credit card from subscription websites or other services that automatically charge you, since you can easily overspend.” Torabi says.

You can allot money first for fixed expenses, such as rent, car payments, gas, groceries and debt payments, then unfixed expenses, such as gym memberships and dining out.

4. Use a different card for new charges

“Do not put any new charges on the card with the transferred balance while you’re paying the balance down,” Malani says.

Instead of using your balance transfer card for new purchases, Malani recommends you use a different credit card and preferably one without a balance. Consider a rewards card, such as the American Express® Gold Card, or a cash-back card, such as the Citi® Double Cash Card.

“Pay the card off in full and on time every single month. If you don’t trust yourself, use a debit card,” Malani says.

5. Have a backup plan

Make sure you have a backup plan in place in case you have a lingering balance after the intro period ends. The post-intro period APR can be quite high, which may cancel out any benefits of completing a balance transfer.

“You could transfer the balance to a new 0% card when the intro period ends, or consider a personal loan,” Malani says.

Bottom Line

Balance transfers can be a great way to reduce the interest charges you are paying, but there is a lot you need to know before you get started. Depending on the size of the balance you are transferring and the length of time you plan to take to pay off that balance, sometimes the amount of interest you save doesn’t even make up for the fee you have to pay to transfer your balance.

Read Also: What are the Credit Cards with the Best Options?

Picking the right credit card, with a mix of lower interest and a low balance transfer fee, is the most important step in deciding to complete a balance transfer. Once you’ve run the numbers for a specific card and have decided that a transfer makes sense, the next thing you need to do is decide when to apply for the card and initiate the transfer.

Although every bank will provide you with a range of times it takes for a balance transfer to be completed, they almost always add that it can take longer in certain circumstances.

These estimates are good for planning purposes, but the only way to really know how long your balance transfer will take is to initiate it and track its progress. You will be able to see when the transfer has been credited to your original card and you can stop making payments.