CREDIT

Considering a Balance Transfer?

Credit card debt in the U.S. is a huge contributing factor to the mental health and financial stress among credit account holders. In the third quarter of 2025, it’s reported that the total credit card debt for cardholders was $1.25 trillion, while Americans average $6,523 of debt. Many often look for ways to extend paying back debt or low-cost debt repayment options. Some opt for balance transfers or a debt consolidation loan to increase their chances of paying off debt sooner. For those considering transferring balances, it’s important to understand the pros and cons, know how they work, and how to select the best options for your financial situation.

What is a balance transfer and how does it work?

A balance transfer is the process of moving debt from one credit card to another with the goal of lowering the overall cost of interest and potentially saving money. During this process, you will choose an option from a reputable financial institution or credit card company. A hard inquiry will be run against your credit to help determine the exact amount you’re looking to transfer and to review your credit worthiness. Once these steps have been completed and you’ve been approved, your new credit account servicer will issue the payoff amount owed to your old servicer and new payments will begin on your new account.

Why would you choose to do a balance transfer?

Many choose to use this option to save money. Some will look for offers that give the opportunity to pay off their credit card balance faster with a limited-time 0% interest window. Many take advantage of this time frame by making larger payments without the stress of interest. Others may specifically be looking for lower-interest cards than what they currently have. Overall, if your needs don’t necessarily fit into either of these categories, you may need to consider if it makes sense for you to choose this route.

How do I pick the best offer?

It’s important to figure out which program offer meets your needs. As previously mentioned, some cardholders opt for a balance transfer that fits their financial situation. When doing your research, be sure to look at reputable companies and ensure you understand all fees, terms and conditions. Sometimes, advertisements may promote a good deal in large type but disclose important information in the fine print. Balance transfer offers will vary between financial institutions and companies. Review the disclosures and ask as many questions as possible when speaking to a representative. If you are looking for 0% interest options with a limited timeframe, coordinate the timing of the balance transfer with when you plan to pay larger payments. Also keep an eye out for potential backdated interest possibilities if the transferred balance isn’t paid in full within a certain timeframe.

As you look at what options are available, don’t limit yourself. Take advantage of what may be offered at your financial institutions and not just credit card companies. When comparing companies, it’s important to ensure your credit isn’t constantly checked to avoid multiple-inquiry changes to your score. Consider if it makes sense for you to do a balance transfer based on what your current interest rates are for the cards you’re focused on. If you’re not sure what route to take, speak to your financial institution or an advisor about what options best suit your financial needs.

Sources:

https://www.forbes.com/advisor/credit-cards/average-credit-card-debt/#average-american-credit-card-debt-per-person

https://www.investopedia.com/credit-cards/balance-transfer-credit-card/