What Are the Pros and Cons of a Balance Transfer Card?

What Are The Pros And Cons Of A Balance Transfer Card
Fiona Staff2/12/2020

As of September 2019, Americans held over $1 trillion in combined credit card debt, accounting for 26.2% of national consumer debt. It's evident consumers are having problems managing and paying off their credit card bills, as mounting interest and penalties make it hard to get one’s head above water.

One option for people struggling to pay off high interest credit card debt is a balance transfer. A balance transfer, in broadest terms, involving transferring high-interest debt from one or multiple cards to another card, typically a brand new one, that offers more favorable payment options to the user. This can come in the form of a lower APR (annual percentage rate), or specifically an introductory APR, a promotional offer that allows users to get charged as low as 0% interest during the promotional period, which can range from six to 18 months. 

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While balance transfer credit cards, as some are often marketed, can be a helpful financial management tool, there are many factors that need to be considered before applying. Here are some pros and potential cons.


With a balance transfer card, a consumer has the chance to pay off their debt at low or zero interest, if the card offers an introductory APR. While most card issuers do charge a fee for the balance transfer itself (in the range of 3% to 5%), that amount is typically offset by the money a cardholder will save in interest. In addition, some credit cards don’t charge a balance transfer fee, although these cards often require a strong credit score for approval.

The key for anyone trying to pay off mounting credit card debt through a balance transfer is to ensure that they can do so during the introductory period. Whether it’s a zero or low APR offered, consumers can save hundreds, sometimes thousands, in interest through the benefit of stretching out the payments for as long as the period lasts. Consumers can also consolidate debt through a balance transfer card, by transferring balances from multiple credit accounts. In some cases, you can ever transfer different types of debt (auto payments, medical bills, etc.).


While the time afforded by an introductory APR provides a great opportunity to pay down debt, it’s important to remember that once the promotional period ends, the card’s standard APR kicks in. At that point, interest will start compounding at a rate that’s potentially higher than what the consumer was being charged before the balance transfer. 

As a result, it’s important to understand the full terms and conditions tied to a balance transfer card, and not just the allure of the introductory APR. Some cards can charge steep penalties for unpaid balances, and make the whole process a net negative if you don’t pay off your debt early. Additionally, while some cards may offer a long introductory APR on subsequent purchases, the APR promotion for balance transfers may take place in a shorter window, meaning a consumer must be vigilant in first transferring all of their debt (from card to card) before actually paying it off. 

Bottom Line

For anyone looking to pay off debt through a balance transfer card, it is important to be vigilant and prepared. Ridding yourself from a high interest rate is one thing, making a plan to timely pay off the debt you still have is another. It’s important to explore all of the terms and conditions of a balance transfer card, to make sure it’s the right option for you. 

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