A balance transfer is the process of moving debt from one credit card to another, usually with the goal of saving money on interest. For example, a card might offer 0% APR on balance transfers for 15 months. This allows you to pay down the balance without accruing new interest charges, making your payments more effective. However, balance transfers often come with fees—typically 3–5% of the transferred amount. If you transfer $5,000, you might pay $150–$250 in fees upfront. Despite this, the savings from avoiding high interest rates can still be substantial.

Balance transfers are best used strategically. To maximize the benefit, cardholders must make payments on time and ideally pay off the balance before the promotional period ends. If the balance remains afterward, standard APR rates apply, which are often high. Some issuers may even revoke the promotional rate if a single payment is missed. Additionally, balance transfers don’t solve the underlying issue of overspending—they simply buy time to pay down existing debt. Used wisely, they are a smart tool for debt management, but without discipline, they can lead to a cycle of repeated transfers and fees.