Here's What Happens When You Transfer Your Credit Card Balance

Balance transfers are one of the most underrated money moves. If you've got credit card debt and you're paying 20%+ interest, moving the balance to a 0% intro APR card pauses interest so that each payment you make goes directly towards debt paydown.

With no interest in your way, you'll save a bunch of money, plus become debt-free way faster.

Here's what happens when you transfer a balance, and how to make the most of that 0% intro APR window.

1. Your old card doesn't close automatically

When you move debt to a new card, your old balance might drop to $0, but the account stays open.

If you leave subscriptions running or add new charges, you'll still owe payments. And if you only transferred part of the balance, you're still responsible for the remainder -- and missing payments on the old card can hurt your credit.

Transferring debt doesn't shut anything down automatically. So just remember to keep an eye on that old account.

2. A fee gets added upfront

Most balance transfer cards charge a 3% to 5% fee on the amount you move over. That's usually added up front, so if you transfer $5,000, you may see a new balance of $5,250 on day one.

It's a small price to pay if you're pausing interest for over a year (you could save over $1,000 easily with some cards). Compare all the top balance transfer cards here with long 0% intro APR windows and low fees.

3. You pay no interest within the 0% APR window

This is where the magic happens. During the promo period, you pay no interest on your transferred balance -- as long as you make at least your minimum payments on time.

That means every dollar you put toward the balance goes directly to reducing your debt, not to interest. The more you can pay each month, the faster you'll be debt-free.

If you want to see how much a balance transfer can save you, use our free calculator to run your own numbers.

4. You can become debt-free faster

Without interest dragging you down, momentum builds quickly.

Let's say you owe $5,000 and commit to paying $100 per week towards the balance. You could be debt-free in about 12 months -- with zero interest paid.

The main goal when doing a balance transfer is to completely pay off your debt during the 0% intro APR promo period. Interest eventually kicks back in, so even if you can't crush your entire balance you'll want to have as little possible owed when that happens.

5. Your credit score might dip, but it should bounce back

Opening a new credit card can trigger a small drop in your credit score. And it might also take a hit if you're now using a high percentage of your new available credit limit.

But don't freak out because as you pay your balance down and continue to make on-time payments, your credit score should recover (and grow higher as your overall utilization goes down).

A balance transfer doesn't magically erase your debt. It's just a tool. Used wisely, it can help you pause interest and smash out credit card debt for good.

Just make sure you pick the right card, run your numbers, and build a plan that you can stick to.

See our favorite 0% intro APR cards to start your debt-free journey.