Balance Transfers of Credit Card Debt

Paying off high interest credit cards or loans by putting the balances on credit cards with lower interest rates or with a zero interest rate.


  • If you can substantially lower the interest rate that you are paying, it should help you to pay the balance in a shorter amount of time.


  • It is never wise to incur additional debts when you are already struggling and new credit can encourage new debt.
  • The 'low interest' credit card company may notify you in writing of a change to your account terms, which increases your interest rates to whatever the company says. In general, these notifications ask you to 'accept' the new terms of the contract, but if you do not accept, you are required to close the account.

What to Avoid

  • Avoid 'cross-default clauses' and other 'tricky' provisions that can provide nasty surprises. 'Cross-default clauses' is fine print in the contract that makes it a 'default' if you become late on anything you owe, such as a phone bill or medical bill, then the interest rate goes from the low or 0% to a very high 'default rate.'
  • Be certain the low interest rate doesn't apply only to new purchases.
  • Find out if balance transfers will be considered 'cash advances' and therefore carry a much higher interest rate.
  • Is there a limit on how long the low interest rate is guaranteed?
  • Avoid assuming that your financial status is good simply because you receive pre-approved credit offers.

What to Look for

  • Look for the answers to all of the questions above, in writing, before you commit.
  • Be certain that you can afford the monthly payment and that it will allow you to pay off your debt in a reasonable period of time.
  • Know whether this is a realistic option for you by doing the calculations to see how long it will take you to pay off the debt at the new interest rate based upon the amount you can afford to pay per month. Financial calculators are available on the Internet.

Potential Impact on Your Credit

Transferring balances may or may not affect your credit scores. Your credit reports and scores will be negatively affected by using more than a very small percentage of the credit you have available with any single lender. Closing credit accounts or opening new credit accounts is also likely to negatively affect your credit rating.