debt
Balance Transfer
A balance transfer moves existing credit card debt to a new card, typically at a 0% promotional APR for 12–21 months. It can save significant interest if the full balance is paid before the promotional period ends.
Most balance transfer offers charge a fee of 3%–5% of the transferred amount. Even with the fee, moving $10,000 of 22% APR debt to a 0% card for 18 months can save $3,000+ in interest.
The trap: if you don't pay off the full balance before the promotional period ends, the remaining balance typically reverts to a high standard APR (often 25%+). Treat a balance transfer as a structured repayment plan, not free money.
Put this into practice with our free calculator:
Open calculator →Related terms
- Debt Consolidation
- Debt consolidation combines multiple debts into a single loan, ideally at a lower interest rate. The goal is to simplify repayment and reduce total interest paid.
- Debt Snowball Method
- The debt snowball method pays off debts from smallest to largest balance, regardless of interest rate. Each paid-off debt frees up cash to accelerate the next — creating a growing 'snowball' of payments.
- Debt Avalanche Method
- The debt avalanche method pays off debts in order of highest interest rate first. It minimises total interest paid and is the mathematically optimal debt payoff strategy.
Frequently asked questions
What is Balance Transfer?
A balance transfer moves existing credit card debt to a new card, typically at a 0% promotional APR for 12–21 months. It can save significant interest if the full balance is paid before the promotional period ends.