Balance transfer

A balance transfer moves what you owe on one credit card to another card or lender that charges a lower, often promotional, rate for a fixed period. It can save interest while you repay, but there is usually a fee, and the rate jumps once the window ends.

How it works

You apply to move an existing balance to a new card or a bank’s balance-transfer offer. For a set window, often a few months, that transferred amount is charged a low or even zero interest rate instead of the usual ~3.5% a month. The idea is to buy yourself breathing room: with little or no interest piling up, more of each payment goes to clearing the actual debt rather than feeding interest.

Where it helps, and where it bites

A balance transfer helps only if you use the low-rate window to repay aggressively. Two things catch people out: a one-time processing fee, often 1 to 3% of the amount moved, and the rate snapping back to normal once the promotional period ends. If a chunk of the balance is still there when the window closes, you are back to paying high interest, now with the fee on top. New spending on the card usually gets no low rate either.

Is it worth it?

Only if you have a realistic plan to clear most of the balance before the window ends, and you stop adding new spending. Otherwise it just shifts the problem. It is one tool alongside the debt avalanche; the real fix is to pay the total amount due in full. See how to get out of credit card debt.