6 Steps to Pay Off Debt With a Credit Card Balance Transfer

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If you’re carrying a balance on credit cards that have high interest rates, you might be able to pay off that debt more quickly with a balance transfer to a card with a lower rate.

In this article, we’ll show you how to do it and tell you why experts say a credit card balance transfer can be a smart move when you want to pay down debt faster.

How to Use a Credit Card Balance Transfer to Consolidate Debts and Get a Lower Interest Rate

“There are many ways to get out of debt,” says U.S. News and World Report credit card expert and consumer finance analyst Beverly Harzog, “but if you still have good-to-excellent credit (a FICO score of at least 720 or so), a balance transfer credit card might be your get-out-of-debt ticket.”

Here are the steps you should take if you’d like to do a credit card balance transfer.

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  1. Know Your Current Balances and Interest Rates
  2. Look for Cards That Offer Favorable Terms for a Balance Transfer
  3. Make Sure You Understand the Fine Print
  4. Apply for the New Card
  5. Complete the Balance Transfer Within the Specified Time
  6. Make Sure You Pay Off the Debt

1. Know Your Current Balances and Interest Rates

The first thing you need to do — no matter what your strategy is to pay off your debt — is to make a list of everyone you owe. This list should include:

  • Who the creditor is
  • How much money you owe
  • What the interest rate is
  • What the minimum payment is

It should look something like this:

Credit card balances on spreadsheet

This will give you an idea of where you stand and show you how something like a credit card balance transfer could help you pay off your debt more quickly by lowering your overall interest rate.

2. Look for Cards That Offer Favorable Terms for a Balance Transfer

Once you have a sense of how much you owe, to whom and what the interest rates are on those balances, you can start looking for opportunities to transfer the balances to a card with a better rate.

Most often, this will take the form of a limited-time balance transfer offer.


With a limited-time balance transfer offer, if you are approved you will pay a lower rate for a specific period of time. At the end of that period, any balance you have remaining will accrue interest at the standard rate for that particular card.

Here is an example of a balance transfer offer from American Express:

American Express Everyday balance transfer offer

Here are the details of the offer:

  • You get an interest rate of 0% on the amount you transfer for 15 months
  • There is no fee to transfer your balance as long as you request the transfer within 60 days of opening the card
  • After the 15 months are up, the interest rate on any remaining balance (and any new purchases you charge) will go up to the standard rate the card has approved for you.

This is an especially attractive balance transfer offer because there is no fee for the transfer within 60 days of opening the card. On many balance transfer offers, there’s a fee of 2%-5% of the amount you transfer.

Of course, you must first be approved for this card to take advantage of this offer and, again, you are generally going to need a good credit score to be approved.

The maximum amount you will be able to transfer will be determined by your credit limit for this card.

You can find our picks for other great balance transfer offers available right here.

You might get a balance transfer offer on card that you already carry, so keep an eye out for one in your mailbox and email inbox.

3. Make Sure You Understand the Fine Print

When you are considering different balance transfer offers, it’s important to understand exactly what you’re getting yourself into. Comparing different offers can be challenging, but generally, you want to be looking at:

  • What the promotional interest rate will be on the balance that you transfer to the new card
  • What the fee is for the transfer
  • How long the promotional interest rate lasts
  • What the interest rate is on balances once the promotional period ends

While some cards like the American Express EveryDay will offer promotional interest rates of 0%, you will likely see other offers with low — but not zero — interest rates.

Whether these are a good deal for you or not depends on the rates you are currently paying.

If the average interest rate you’re paying on your balances is 15.99%, a balance transfer offer for 3.99% is still a big improvement.

4. Apply for the New Card

Once you’ve assessed your options, it’s time to apply for the one that makes the most sense for you based on the criteria outlined above.

If you’re applying for a balance transfer, it’s pretty safe to assume that you’ve applied for a credit card before, so you know the drill.

However, it’s important to avoid a key mistake many people make when applying for new cards: overstating or understating your income.

While credit card companies use your credit score as the primary method of determining whether you’re likely to pay your bills in a timely manner, they also want to know that you have enough cash flow to pay off the money they’re loaning you. Your income helps them figure this out.

Before you fill out your application, make sure you have an accurate accounting of what your gross income is, minus any recurring liabilities (child support, for example). You will be asked for this information.

Overstating your income could mean you are extended credit that you won’t be able to pay back, while understating it could mean getting a lower credit limit than you’d like. It’s important to be accurate.

5. Complete the Balance Transfer Within the Specified Time

After you’re approved for your balance transfer card, it’s critical to make sure you understand how long you have to complete the balance transfer process.


With the American Express EveryDay card we used as an example above, that’s 60 days. However, Team Clark has seen it as short as 30 days (45 days is also a common length of time for this).

During this time, you’ll have the option to transfer one or more debts to the new card.

If you don’t initiate the transfer within the specified amount of time, your promotional interest rate will expire.

6. Make Sure You Pay Off the Debt

If at all possible, you want to pay off the debt that you’ve transferred to the new card before the promotional rate ends.

If you can’t pay off the balance entirely, you’ve still probably saved yourself some money on interest. But you’ll have a balance at the higher interest rate that kicks in after the promotional period.

It’s important to avoid making any new purchases or charges on your new card until you pay off the balance you transferred, or you may end up negating the progress you’ve made toward paying down your debt.

In most cases, those new charges will be subject to the card’s standard rate, and your payments will be applied to the balance on those new purchases first. That means you won’t be paying down the debt that you transferred to the card — which was the whole point to begin with.

Final Thought

Using a credit card balance transfer to pay down debt can be an effective way to get yourself closer to the ultimate goal of being debt-free.

Just make sure you understand what you’re getting yourself into when you do a balance transfer, be sure to follow the rules set by the credit card companies, and actually pay down that debt. Follow that path, and you’ll find that you really can use these offers to your financial advantage.

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