Glossary
Balance transfer
A balance transfer moves debt from one credit card to another, usually to a card with a 0% or low intro APR, in exchange for a transfer fee of typically 3% to 5% of the amount moved.
It saves money when the interest avoided during the intro period is more than the fee, and it works best if you clear the balance before the intro rate ends. Issuers don't accept transfers between two of their own cards.
Payments above the minimum go to the highest-rate balance first under the CARD Act, so new purchases on a transfer card can still cost interest.
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Related terms
- Balance transfer feeThe charge for moving a balance to a credit card, usually 3% to 5% of the amount transferred, often with a $5 minimum, added to the new card's balance.
- Intro APRA low or 0% interest rate a credit card charges for a set time after you open it, on purchases, balance transfers or both, before the regular APR applies.
- APR (annual percentage rate)The yearly cost of borrowing as a percentage: on a credit card, the interest rate on balances you carry; on a loan, the interest rate plus certain fees.
Sources: CFPB: Regulation Z, 12 CFR 1026.53