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Many Americans carry a balance on their credit cards. In 2023, U.S. consumers’ credit card balances totaled more than $1 trillion. Credit card debt can be very expensive, and a large balance can take years to pay off. But a balance transfer from a credit card company like Bank of America can offer a reprieve from high interest rates and the chance to pay off your debt faster.
A balance transfer is a feature some credit card companies offer. If you’re approved for a balance transfer card, you can take a balance from another issuer’s card and move it to the balance transfer card. You pay a fee that’s usually a percentage of the total you’re transferring. Balance transfer offers generally give you an introductory annual percentage rate on the balance for 12 to 21 months. If you don’t pay off the entire balance during the introductory period, a higher APR applies once that time is up.
A balance transfer offers these advantages:
Interest savings. Depending on the offer, you may pay a lower APR or a 0% APR during the balance transfer period.
Breathing room to pay off your balance. Balance transfer periods can last as long as 18 or 21 months, which gives you time to pay down the debt.
The ability to tackle principal more quickly. With a low or 0% APR on the transferred balance, much or all of your payments go toward paying down your principal balance.
But it comes with the following drawbacks:
Not available to everyone. If you have poor credit, you may not qualify for a balance transfer.
Temptation to keep spending. If you don’t commit to reining in spending while you pay off your balance, you can end up in even more debt.
Possible ding to your credit score. Opening a new card to transfer a balance results in a hard credit inquiry and can decrease the average age of your accounts, which could lower your credit score.
Follow these steps to complete a balance transfer through Bank of America:
If you decide to proceed with a balance transfer, there are a few pitfalls to steer clear of.
Be careful not to miss payments or make late payments on your balance transfer card. Not only could you incur late fees and hurt your credit score, but you could lose the promotional APR.
Also avoid making new purchases on your balance transfer card. You typically don’t get a grace period on new purchases when you’re carrying a balance, so you’ll be charged interest immediately on things you buy. That leaves you with a larger balance to pay off. “If the goal is to consolidate debt, you don’t want to keep racking up debt,” says Renee Jones, vice president of product management at Georgia’s Own Credit Union.
You should avoid transferring a balance that’s larger than your credit limit. Whether you can exceed the limit depends on the credit card company’s policies. “Many will allow you to go above your credit limit for up to 10%, sometimes 20% above what they’ve approved you for,” says Geri Hopkins, chief operations officer at Skyla Federal Credit Union in Charlotte, North Carolina. But credit card companies generally charge an over-limit fee, so the balance transfer will be more costly.
And refrain from doing balance transfers too frequently. Repeatedly opening new balance transfer cards can hurt your credit score and tempt you to overspend. “It should be something that should be quite rare – once every few years or so,” Hopkins says.
Here’s how to get the most out of a balance transfer:
Best for: Everyday spending
The Bank of America® Customized Cash Rewards credit card offers a 0% intro APR on balance transfers for the first 15 billing cycles. Spending $1,000 on purchases in the first 90 days earns a $200 online cash rewards bonus. The card gives tiered rewards of 3% cash back on a selected category, 2% back on grocery and wholesale club spending and 1% back on other purchases. The higher rewards rates are limited to the first $2,500 of combined spending in the eligible categories per quarter.
Best for: Consistent cash back
The Bank of America® Unlimited Cash Rewards credit card offers a 0% intro APR for the first 15 billing cycles on balance transfers. Spending $1,000 on purchases in the first 90 days gives a $200 online cash rewards bonus, and all purchases earn 1.5% cash back. You can redeem the cash rewards for a statement credit, deposit them in a Bank of America checking or savings account or move them to an eligible Merrill account. The card doesn’t charge an annual fee.
Best for: No-frills balance transfers
The BankAmericard® credit card doesn’t provide rewards or a sign-up bonus, but it offers a 0% intro APR on balance transfers for 18 billing cycles. The card has no penalty APR and no annual fee. Cardholders can track their FICO score monthly and access financial education resources.
Best for: Travel spending
The Bank of America® Travel Rewards credit card offers a 0% intro APR on balance transfers for up to 15 billing cycles. There’s a sign-up bonus of 25,000 online points worth $250 toward travel or dining if you spend $1,000 on purchases in the first 90 days. The card earns 1.5 points per $1 of spending, and points can be redeemed as statement credits to offset travel and dining purchases. Plus, the card doesn’t charge foreign transaction fees.
You can check the status of a balance transfer by logging into your online account or viewing your account on the Bank of America app. First go to Information & Services, then choose Balance Transfer and Direct Deposit History.
Opening a new credit card can cause your credit score to drop. And if you continue to spend after a balance transfer, your credit utilization rate will suffer, which may also hurt your score. But responsibly using a balance transfer card to reduce your debt can improve your credit score over time.
You may be able to request a credit line increase in your online account by navigating to Account Summary and then Card Details. If you don’t see the option to request a credit line increase there, you can call the number on the back of your card and speak to customer service.
Instead of using a balance transfer card, you could take out a debt consolidation loan or a home equity loan. Another option is to work with a nonprofit credit counselor to set up a debt management plan.