Credit Card Balance Transfers: Pros and Cons

Article originally published on January 29, 2018, and refreshed on May 3, 2023.

You’ve likely received them in the mail: enticing balance transfer offers from credit card companies practically begging to take on your existing credit card debt. They may promise months without interest charges and seductively low fees. So, what’s the catch?

Credit card balance transfers — paying off one credit card with another — come with several caveats that should give consumers pause before jumping in. Under the right circumstances, however, moving credit card debt from a higher-interest to lower-interest environment can be a smart way to diminish debt.  A balance transfer may make financial sense for you if some or all of the following circumstances apply. 

Credit Card Circumstance 1: You carry debt on a high-interest credit card

If you fork out monthly interest payments on a high-interest credit card, a balance transfer could yield significant savings — especially if you pay off the debt during the introductory period (generally 6 to 18 months) when many credit card companies offer rates as low as zero percent.

If, on the other hand, you make minimum payments and retain a balance when the introductory period ends, the remaining debt will be subject to a regular variable annual percentage rate, potentially offsetting previous savings. Consider, too, that most credit card companies charge an upfront balance transfer fee (usually 3 to 5 percent of the transfer amount), something to factor into your calculations.

Credit Card Circumstance 2: You want to consolidate debt

One perk of a credit card balance transfer is the opportunity to simplify your finances by bringing all your debt under one roof. And credit card balance transfers aren’t necessarily limited to credit card debt. It may be possible (though not necessarily prudent) to transfer other types of debt, like auto or furniture loans, through a balance transfer. Just make sure the loan you are transferring doesn’t have a prepayment penalty.

Also beware moving debt from a fixed interest rate environment to a loan with a variable interest rate, which may increase over time. Of course, a credit card balance transfer isn’t your only option for consolidating debt — you can also move debt under a single umbrella with other types of loans, including a Zions Bank personal loan* or a Zions Bank home equity loan*. 

Credit Card Circumstance 3: You have the discipline to pay off the debt

A credit card balance transfer might buy you time, but it won’t wipe out your debt. Don’t let a false sense of debt relief lure you into lagging on your repayment goals. Before committing to a balance transfer, lay out a timeline for paying down the debt. Avoid using the new card to rack up additional charges, which may not qualify for the introductory interest rate. Additionally, remember to pay any bills owed to the existing creditor while the transfer is being processed, which can take several weeks.

Credit Card Circumstance 4: You have good credit

Unfortunately, the tantalizingly low rate on a given credit card balance transfer promotion may not be the one you qualify for. The lowest interest rates and most generous terms are generally limited to those with good or excellent credit. Check with a lender to find out about their credit requirements. As an alternative to a balance transfer, you may be able to qualify for a personal loan at a lower interest rate than your current one. Keep in mind that a credit card balance transfer itself will have little impact, for good or for ill, on your credit score.

Credit Card Circumstance 5: You are willing to read the fine print

The devil is in the details when it comes to weighing the pros and cons of a credit card balance transfer. In addition to comparing introductory periods, APRs, fees and rewards, you’ll want to evaluate the terms and conditions of various offers. In some cases, for example, a missed credit card payment will cancel the teaser rate and bring on immediate interest payments. Additionally, introductory rates don’t always apply to new purchases. Knowing the rules before you enter the ring and makes all the difference in a successful credit card balance transfer.

For credit cards that offer zero percent APR balance transfers — in addition to amazing rates, cash back and rewards — check out Zions Bank’s Clarity, Vivid Rewards and Agility Cash Visa^® Credit Cards** or compare Zions Bank credit cards and select the one that best meets your needs.

*Subject to credit approval. Terms and conditions apply. See banker for details.

**Subject to credit approval. Terms, conditions and restrictions apply. See banker for details.