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Pros And Cons of Balance Transfer Credit Cards

Pros And Cons of Balance Transfer Credit Cards

So you’ve been wondering of the pros and cons of balance transfer credit cards and how they make these promises about saving money and paying off debt faster. But are balance transfer cards really all they’re cracked up to be? Before you fill out an application, it’s worth weighing the pros and cons. A balance transfer card code could be a smart move if used responsibly.

If the math works out, you could save hundreds or even thousands in interest charges. However, there are some potential downsides to keep in mind. That’s why this blog post is going to be exploring just that — the pros & cons of balance credit cards.

What Are Balance Transfer Credit Cards?

A balance transfer credit card allows you to transfer the credit card balances from a high-interest credit card account to a new card that offers a lower interest rate, ideally 0% APR for a limited time. This can save you money if you have revolving debt.

How Do Balance Transfers Work?

Once approved for a balance transfer card, you can move some or all of the balances from other credit cards over to the new card, up to your credit limit. Many cards offer a 0% APR promotional period, typically 6-21 months. During this time, more of your payments go toward paying down the principal balance since there’s no interest.

Is a Balance Transfer Card Right For You?

Is a Balance Transfer Card Right For You?

If you have high-interest debt and want to pay less interest over time, a balance transfer card could be a smart strategy. But only if used responsibly by making a plan to pay off the entire transferred balance before the intro period ends. The interest savings can be substantial, allowing you to get out of debt faster and for less. With diligent payments, you’ll be raising your credit score in no time!

The Pros of Balance Transfer Credit Cards

Credit card balance transfer can be a great way to pay off high-interest debt. Here are some of the major pros to consider:

Save money on interest charges

The biggest benefit is saving money that you’d otherwise pay in interest fees. If you have credit card debt on a high-APR card, a balance transfer can give you a grace period of up to 21 months where you pay 0% interest. That means more of your payment goes toward paying down the principal balance and not as interest payments.

Pay off debt faster

With interest charges paused, you can put more toward paying off the debt. If you keep making the same payment you were before, you can pay the balance off even faster. Or keep paying the minimum and use the extra money for other needs. Either way, you end up debt-free sooner.

Consolidate payments

Do you have balances on multiple credit cards? A balance transfer card lets you consolidate them onto a single card so you only have to make one payment each month. That can simplify your finances and make payments more manageable.

Potential credit limit increase

When you open a new balance transfer card, you may be offered a higher credit limit than what you currently have. This can give you more flexibility and even allow you to transfer additional higher-interest balances to the new card. Just be sure not to go overboard and max out the card right away.

The Cons of Balance Transfer Credit Cards

The allure of 0% APR balance transfer offers can be tempting, but these cards also come with some potential downsides to keep in mind.


Most balance transfer cards charge a one-time balance transfer fee, typically 3-5% of the amount transferred. So if you transfer $5,000, you could pay $150-$250 in balance transfer fees. Some cards waive this fee for a limited time or for certain promotional offers, so check the terms first.

Interest charges

If you don’t pay the full balance before the 0% intro APR period ends, you’ll start paying interest charges on your remaining balance—and often at a higher rate. The average APR on balance transfer cards is around 15-25% once the intro period is over. Be very careful not to miss any payments before the 0% period ends.

Limited intro period

Most 0% APR balance transfer offers only last for a limited time, often 6-18 months. If you need longer to pay off your transferred balance, look for a card with at least 12-15 months of 0% APR. Make a plan to pay off your balance before the intro period ends to avoid interest charges.

Impact on credit

When you open a new credit card, it can temporarily lower your score a few points in your credit report. The effect is usually small, but if you’re planning to apply for a mortgage or auto loan soon, it’s best to avoid opening new accounts altogether. Also, having too much available credit you don’t use (a high credit utilization ratio) can hurt your score.

Debt trap

While balance transfer cards can help you pay off high-interest debts faster, they can also enable you to rack up even more debt that you struggle to repay. It’s important to address the underlying cause of your debt and make a realistic plan to pay off balances for good. If needed, seek credit counseling to help get your spending under control.

Tips for Using Balance Transfer Cards Responsibly

Tips for Using Balance Transfer Cards Responsibly

Using balance transfer cards responsibly is key to avoiding debt and penalties. Here are some tips to keep in mind:

Pay on time

The biggest responsibility is making at least the minimum payment for each monthly payment. Late or missed payments hurt your credit score and may trigger penalty APRs on your card. Set up autopay for at least the minimum amount to avoid slip-ups.

Pay more than the minimum

If you only make minimum payments, it can take years to pay off your balance and end up costing you more in interest charges. Pay as much as you can each month to save money and reduce your debt. Even increasing your payment by $10 or $20 can make a big difference.

Avoid Getting new charges

Only use your balance transfer card to pay off debt from other cards. New charges on the card simply add to your balance and increase the interest you pay each month. Use a different card or payment method for any new purchases.

Check your rate

Most balance transfer offers charge 0% APR for a limited intro period, often 6-18 months. Make note of when the promotional period ends to avoid surprise interest charges. If needed, look for a new balance transfer offer before it expires.

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