76% of Americans Are Misinformed about How Balance Transfer Cards Work

76% of Americans Are Misinformed about How Balance Transfer Cards Work

December 23, 2019         Written By Bill Hardekopf

Balance transfer cards provide a convenient opportunity for cardholders to lower their interest or consolidate credit card debt. However, many Americans do not fully understand how these cards work, even if they have owned a balance transfer card in the past.

Many balance transfer credit cards come with a 0% introductory period, where the transferred balance does not incur interest for 12-15 months, on average. According to a new study, 76% of consumers inaccurately believe they will be charged retroactively for interest if they do not pay off their transferred balances by the end of the intro period. This may deter people from applying for a card if they do not believe they can pay off the balance in that time.

After the introductory period is over, only the remaining balance on the card will incur interest. The previous balance has no impact on the amount of interest charged.

There is a difference between the balance transfer APR and a balance transfer fee. Some cards charge a one-time fee when a balance is transferred, usually 3% of the balance. Review the fee terms closely before applying for a balance transfer credit card to determine which card is right for you.

Here are some other thoughts on transferring a balance from one card to another:

  • Be sure to note the ongoing interest rate you will be assessed after the introductory rate expires. This is even more important if you are not sure you’ll pay off 100% of the balance during this introductory period.
  • If you do not have a good credit score, you will likely not receive the advertised offer. Your ongoing APR may be higher, you may receive a shorter intro period, or you may not be able to transfer your entire balance from one card to the other.
  • It is extremely important to pay your credit card bill on before the due date every single month. Your introductory period will usually end immediately if you are late on a payment. You will then have to pay the ongoing APR on the balance that you transferred.
  • The 0% introductory APR may only apply to the transferred amount and not the purchases you make during the introductory period. Make sure to read and understand the terms and conditions of the card to see if the introductory offer includes new purchases.


The information contained within this article was accurate as of December 23, 2019. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.


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About Bill Hardekopf

Bill Hardekopf is the CEO of LowCards.com and covers the credit card industry from all perspectives. Bill has been involved with personal finance for over 15 years. He is a frequent contributor to Forbes, The Street and The Christian Science Monitor.
View all posts by Bill Hardekopf
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