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How Does Balance Transfer APR Work?

Learn what a balance transfer APR means, how it differs from an intro balance transfer APR, and whether you should perform a balance transfer.
By: Suleman Anwer
Credit Cards - General
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Are you curious about what a balance transfer APR means? 

A credit card balance transfer is a transaction that lets you move your debt from one credit card account to another. 

But this doesn’t make your debt interest-free, as the new credit card issuer will still charge you interest based on the balance transfer APR (annual percentage rate). 

However, you can potentially save a lot of money by moving your debt to a credit card with a 0% intro balance transfer APR. You could also do this to opt for the lower ongoing balance transfer APR though such savings are usually offset by the balance transfer fee so it might not be the best idea.

In this article, we’ll explain what balance transfer APR means and how it differs from an intro balance transfer APR. We'll also share our tips on what to look for in a good balance transfer card and whether or not you should do a balance transfer

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Let’s get started. 

What Does Balance Transfer APR Mean?

A balance transfer APR determines the interest charge you’ll pay to a card issuer on the debts you move to your new balance transfer credit card from an earlier credit card or a personal loan. 

Note that a card issuer will only charge a balance transfer APR when you don’t repay your credit card balance in full.

Additionally, a balance transfer APR is one of multiple credit card APRs you could be charged, for example, there is a different APR for cash advances. If you fail to pay your bill before the due date a penalty APR may be applied which substantially increases the amount of interest you pay.

What is an Intro Balance Transfer APR?

If a balance transfer credit card charges a balance transfer APR, why transfer your debt to a balance transfer card at all?

Here’s why:

Most balance transfer credit cards come with a low or 0% intro APR period. A great balance transfer card offers an extended period of interest-free balance transfers. These intro periods can range from anywhere between 6 to 24 months.

A 0% APR offer gives you time to pay off your credit card balance without paying any added interest charges on the amount you've transferred. 

Next, let’s look at some important things to keep in mind before doing a balance transfer. 

3 Key Things to Know About Balance Transfer APRs 

Here are three details about credit card balance transfer APRs you should keep in mind: 

1. Limited Period Offer

Any intro balance transfer APR offer applies for a limited time period. 

If you fail to pay off your debt by the end of the intro APR period, the credit card company will raise your credit card interest charges based on the ongoing interest rate of the card.

Most balance transfer cards may charge a variable interest rate once the promotional period ends. 

2. Loss of an Intro Balance Transfer APR Offer

Depending on the credit card's terms, a missed minimum payment or a late payment can also forfeit the intro balance transfer APR offer. 

3. Different from 0% Deferred Interest

A 0% deferred interest is different from a 0% intro balance transfer APR offer. 

In the case of a 0% deferred interest, you’ll have access to a 0% APR period to pay off your transferred balance. However, the interest continues to accumulate during this promotional period. 

If you manage to pay off the outstanding balance completely before the end of the deferred interest grace period, then you don't have to pay an interest charge. 

However, if you have an unpaid balance when the deferred interest period ends, the credit card issuer will add all accumulated interest to your credit card balance.

Next, let's talk about the scenarios when a balance transfer makes sense. 

Should You Do a Balance Transfer?

Some things to consider before going through with a balance transfer:

A. New Card's Balance Transfer APR 

Balance transfers only make sense if the new card has a lower interest rate than your existing one. 

That’s why it’s important to check if you qualify for a balance transfer credit card with a very low or 0% introductory interest rate.

B. Can You Pay Off the Transferred Balance Before the Intro Period Expires?

Most intro balance transfer APR offers expire within 6 to 24 months. A balance transfer card is the most beneficial when you pay off the transferred balance with 0% interest. 

C. Balance Transfer Fee

Credit card companies usually charge a balance transfer fee of 3-5% of the transferred balance. It's best to do your math beforehand to make sure that the fee doesn't offset the potential savings of doing a balance transfer. 3-5% can potentially be a lot money, especially if you plan on transferring a large balance.

D. You Can Transfer Most of Your Credit Card Debt

The entire balance transfer amount usually can’t exceed your credit limit. 

A balance transfer card issuer will either let you transfer a balance that’s equal to your credit limit or only a percentage of your credit limit.

E. The Balance Transfer Card Helps With Debt Consolidation

A balance transfer credit card can help consolidate your debt. 

You can use this new credit card to merge your outstanding balance into one credit card account. This can potentially reduce the chances of missing a monthly payment and help reduce your credit utilization ratio.

Now let’s look at how you can choose the right balance transfer card for your financial needs. 

What to Look For in a Good Balance Transfer Card?

There are two key features to consider when searching for a strong balance transfer credit card: an extensive 0% intro balance transfer APR period and the balance transfer fee. 

Apart from these two, keep an eye out for the annual and late payment fees, as well as the regular balance transfer and purchase APRs. Features like cash back, the rewards program, and foreign transaction fees should also be on your checklist.

Here are three great balance transfer credit cards that cardholders can use to clear their high-interest credit card debt:

Note: The credit rating required to qualify for balance transfer credit cards is pretty high. You will need a credit score of around 680 or more. If you have a bad credit score and a high credit utilization rate, your credit card application may not qualify for a great balance transfer offer. 


Balance transfers can be great money-saving options where you have to pay off high-interest credit card debt or transfer a current balance from a personal loan. 

Factors like the intro APR duration and the balance transfer fee largely determine the value of any balance transfer card but there are other considerations as well, with proper usage, a balance transfer can help you save hundreds of dollars. 

You can check out our list of the best balance transfer cards to find an option suitable to you.

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