Crucial Insights to Keep in Mind
- Slashing interest charges is achievable by moving your debt onto a credit card offering an introductory 0% APR on balance transfers.
- Beyond credit card balances, some transfer cards accept personal loans, auto loans, home equity loans, and even student loans for consolidation.
- Do remember: not every card issuer permits transfers of all debt types, and shuffling debt between cards from the same bank is usually off the table.
Fed up with sky-high rates gnawing away at your credit card balance? A balance transfer card might just be your ace in the hole.
Many card providers allow you to roll over personal, automotive, home equity, and student loan debts onto a balance transfer card, potentially trimming thousands off what you’d otherwise pay in interest. However, if the balance isn’t cleared before your introductory APR period lapses, you could find yourself back at square one with pesky interest charges.
Wondering exactly which debts can hitch a ride onto a balance transfer card? Let’s take a stroll through the usual suspects that might qualify, depending on your card issuer’s policies.
The Ubiquity of Credit Card Debt
Did you know almost half of American credit card holders—around 46%—carry a balance month to month? That’s a hefty chunk of folks according to recent Bankrate data. With average credit card APRs hovering north of 20%, the sting of interest is far from mild. Snagging a reprieve from these charges, sometimes for a year or more, can provide essential breathing room to wipe out your debt completely.
Heads up: Most issuers frown upon shifting debt between their own cards. So, if you owe money on a Bank of America card, you likely can’t just transfer that balance to another Bank of America card.
Rolling Over Auto Loans
Interestingly, many issuers do allow balance transfers for auto loans.
This is largely due to auto loans typically carrying lower interest rates than credit cards.
But here’s the kicker—transferring a personal loan onto a balance transfer card is more nuanced. Personal loans usually sport better interest rates than credit cards, especially if your credit isn’t stellar. If you can clear that balance within the intro APR window, the zero-interest offer beats even a low personal loan rate hands down. On the flip side, missing that deadline means you might pay more interest than if you’d stuck with your original loan.
Student Loans: Possible but Problematic
While you can technically move student loan debt onto a credit card, it’s often a financially dicey move. Avoid losing precious benefits like deferred payments or grace periods by rushing this decision.
Home Equity Loans
Got a home equity loan? Transferring the entire balance to a credit card is usually off limits unless you’ve paid it down substantially or started with a modest loan amount. In such cases, some issuers might let you shift that debt over.
Which Debts Can You Transfer? A Snapshot by Issuer
Transfer policies vary by issuer, but here’s a general overview of which types of balances are usually accepted—bear in mind to confirm specifics before making a move.
| American Express | ✔ | – | – | – | – |
| Bank of America | ✔ | ✔ | – | ✔ | ✔ |
| Capital One | ✔ | ✔ | ✔ | ✔ | – |
| Chase | ✔ | – | – | – | – |
| Citi | ✔ | ✔ | ✔ | ✔ | ✔ |
| Discover | ✔ | ✔ | ✔ (excluding federal loans) | ✔ | ✔ |
| Wells Fargo | ✔ | – | – | – | – |
Stats to Ponder
According to the Federal Reserve, as of 2023, outstanding credit card debt in the U.S. totaled over $1 trillion. Meanwhile, the average interest rate on new credit card offers sits close to 22%, making the appeal of 0% balance transfer cards even more compelling to those juggling high-interest debts.
Things to Mull Over Before Transferring Debt
Before taking the plunge, weigh these key considerations:
- APR after the intro period: Should your balance linger past the promotional term, beware—the leftover amount will be charged interest at the card’s regular APR, which can be steep.
- Balance transfer fees: Many cards slap on a fee for transferring balances, often around 3-5% of the amount moved. Factor this into your cost-benefit calculation.
- Credit limits: Typically, you can’t transfer more debt than your card’s credit line allows. Make sure your limit can swallow your balance fully.
Trying to dump loan debt onto a credit card requires caution—without proper planning, you might end up shelling out more in interest than you intended.
Burning Questions About Balance Transfers
Will transferring a balance dent my credit score?
It can, but usually only a bit and temporarily. Moving a balance to a card you already own generally won’t cause a ripple. However, if you open a new card to snag a balance transfer deal, your credit score might take a slight, short-lived hit due to the credit inquiry involved, provided you keep spending in check.
How do I actually pull off a balance transfer?
Simply ring up your card’s customer support or navigate your online account to initiate the transfer. Just be sure to comb through all terms and fine print to avoid having your request denied due to small oversights.
