Credit card rates are the highest they've been in years. As of August 2023 — the last available data — the average rate for credit cards that charged interest was 22.17%. To put that number in perspective, consider that the average credit card interest rate was 16.45% just two years ago.

If you have outstanding credit card debt, high interest rates can make it difficult to regain control of your finances. Transferring your balances to a card with a lower rate can be a smart way to get back on track. Learn how to transfer credit card balances to save money and pay off your debt faster.

What is a balance transfer?

A balance transfer refers to the process of transferring your balance from one credit card to another. Typically, you'll transfer the balance to a card with a lower annual percentage rate (APR) than the current card.

With some balance transfer credit cards, you can take advantage of special promotional offers, such as an introductory APR rate that lasts for a limited time. For example, the Wells Fargo Active Cash® Card currently offers 0% APR for 18 months on balance transfers and purchases. The introductory offer gives you time to pay down your balance without having to pay interest charges and, at the end of the promotional period, the regular purchase APR applies to the outstanding balance.

3 benefits of balance transfers

For those with credit card debt, balance transfers can be appealing for three reasons:

1. You'll pay a lower rate

If you qualify for a balance transfer, you can have several months to pay down your debt at 0% APR. No interest charges apply during this time, so you'll save money and pay off your balance more quickly since your entire payment goes toward the principal.

2. You can simplify your payments

If you have multiple cards with balances, keeping track of what you owe and your due dates can be difficult. Assuming you qualify for a card with a large enough credit limit, you can use a balance transfer card to move the balances of multiple cards to the new one, consolidating your debt. Going forward, you'll have just one card and monthly due date to remember.

3. The application process is quick and easy

Unlike some forms of credit, which can have extensive application and review processes, applying for a balance transfer credit card is quick and easy. You can apply online and receive a decision within minutes.

3 drawbacks of balance transfers

Although transferring credit card balances to another, lower-interest card can be an effective way to save money, there are some drawbacks to consider:

1. Balance transfers usually involve fees

It's not free to transfer your balance to another card; credit card issuers usually charge balance transfer fees. The fee varies by card, but it ranges from 3% to 5% of the transfer amount. For instance, while the Wells Fargo Reflect® Card offers an exceptionally long 21 months of 0% APR on balance transfers, it also charges 5% on the transfer amount.

If you transferred a $1,000 balance to that new card, that means your fee would be $50 versus $30 if you went with the Citi Double Cash® Card which has a balance transfer fee of 3%.

2. It doesn't solve the debt problem

Moving your debt to a lower-rate card and combining your balances can help you manage your debt, but it doesn't solve the root cause of the problem. Unless you address the issues that caused you to accumulate debt in the first place, you may just worsen the problem since you'll have a new credit card and credit limit to use.

3. Not everyone will qualify for a low APR

To qualify for a balance transfer credit card that offers 0% APR for a specific period, you'll generally need good to excellent credit. If your credit score isn't in that range, you may not be eligible for a balance transfer card.

You'll also need to make sure you can qualify for a card with a high enough credit limit to transfer your full balance; otherwise, you won't be able to move all of your debt, and you'll have to juggle multiple accounts.

How to transfer a credit card balance to another card

If you've decided that a balance transfer is a good idea for your situation, here's how to transfer your credit card balance in five steps:

1. Research available cards

There are many balance transfer credit cards available. When shopping for a new card, consider the following factors:

• Promotional period length: Promotional APR offers can last anywhere from six to 21 months. The longer the period, the more time you have to pay down your debt without interest.

• Annual fee: Some cards charge annual fees, so you have to pay a fee just to have the card open.

• Balance transfer fee: The balance transfer fee applies to the amount you transfer to the new card. It's usually 3% to 5% of the transfer amount.

Below are five leading balance transfer cards available now:

2. Review the balance transfer terms and conditions

When you've narrowed down your options to two or three cards, review each card's terms and conditions. Make sure you know how long the promotional APR applies and when the transfer needs to be completed to qualify for the introductory offer. For example, some cards will only apply the introductory 0% APR to transfers completed within the first 60 days of account opening.

3. Fill out the application

Once you've found the right card for you, you can fill out a credit card application. Most issuers allow you to apply online; you'll need to provide your birth date, contact information, mailing address, income and Social Security number. You may also be asked for a copy of your driver's license or other government-issued ID.

In most cases, you'll receive a decision right away. If you're denied, the issuer will send you a letter explaining why through the mail.

4. Request a balance transfer

After opening a new account, you can transfer your credit card balance to the new card. Some card issuers allow you to handle the transfer process online through their portals, but others require you to call their customer service departments to request a balance transfer. If you have to call, tell the representative you'd like to transfer your balance, and explain what card you're transferring and the amount you're moving to the new card.

Continue making your required payments on the existing cards until you receive a confirmation that the credit card balance has been paid in full. Otherwise, you risk missing a payment and incurring late fees and damage to your credit score.

5. Make a note of the promotional period's end date

Note when your promotional APR ends and the regular purchase APR applies. To maximize the effectiveness of a balance transfer, aim to pay off the entire balance in full by the end of the promotional period; otherwise, interest will accrue, decreasing the impact of the transfer.

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