How to Transfer a Credit Card Balance to a Lower Interest Rate Card

If a period of poor credit-card-related decision making has left you with a seemingly impossible-to-pay-down balance, transferring this lump to a lower interest rate card may seem a tempting option. In many cases, making this debt move could save you big bucks; however, if you enter into this financial transaction without fully exploring the situation, you could actually end up losing on the deal. To ensure that your balance transfer scheme ends up in your favor, move through the process carefully and systematically.

Select an account with favorable terms to which to transfer your balances. Search for an account with a low interest rate for balance transfers online or keep your eyes on your junk mail, since many credit card companies send offers for accounts of this type. If you can’t find one you like through these means, visit your bank and ask specifically about accounts with low balance transfer interest rates.

Inspect the fine print associated with the credit card to which you are going to transfer your balances. The credit card company in question will likely place the most favorable account terms in bold, attention-getting print, but may try to hide some pesky details in magnifer-requiring tiny letters. Before committing to a likely irreversible balance transfer, read the fine print – all of it. Look specifically for information as to how long this transfer interest rate is good for and what happens at the end of the term should the balance not be paid off. In some instances, if you don’t have the balance paid in full by the introductory term’s end, you will not only start accruing interest on the amount you transferred, but you will also be stuck with interest dating back to the date of initial transfer.

Include the intended balance transfer on your card application. In many cases, you can write the amount that you wish to transfer, along with the account from which the balance will be transferred, on your credit application. If you do this, the credit card company will immediately transfer that amount as soon as your account is approved.

Speak with a credit representative if you intend to transfer your balance to a pre-existing account. That financial institution can either send out a check that you can use to transfer the balance or transfer the balance electronically. This step is particularly important if you are trying to take advantage of a balance transfer-only rate, because if you don’t transfer your balance properly, you likely won’t get this favorable rate.

Make a plan to pay off the balance within the time allowed if the lower interest rate is only temporary. Don’t let your newly lowered rate lead you to be lackadaisical in your payments, but instead set up a plan for repayment to ensure that you pay off this balance as quickly as possible, particularly if your rate is only temporary.

About the Author

Erin Schreiner is a freelance writer and teacher who holds a bachelor's degree from Bowling Green State University. She has been actively freelancing since 2008. Schreiner previously worked for a London-based freelance firm. Her work appears on eHow, Trails.com and RedEnvelope. She currently teaches writing to middle school students in Ohio and works on her writing craft regularly.