Why Do Balance Transfers Take So Long?

Why Do Balance Transfers Take So Long?

May 1, 2018         Written By Tracy Farnsworth

Every day, credit card offers appear in your mailbox. You see them in online ads, offers like 0% interest for 12, 18, or 24 months are bound to get your attention when your current credit cards have APRs that are higher than you would like. You open a new credit card after getting a 0% introductory balance transfer offer. With the new credit card, your goal is to transfer the balance from your old card and take advantage of the introductory interest rate. You have done everything you need to do but the balance on your old card still has not been zeroed out. It has been weeks. Why do balance transfers take so long?

Technology has helped make the process faster. Go back a decade, and it could take your balance transfer as long as a month before it cleared. Compare that to today when most transfers are completed within 14 business days. You do need to remember that credit card companies only process balance transfers on weekdays (Monday through Friday). If you request a balance transfer on Friday or Saturday, the process will not start until offices open on Monday. If Monday happens to be a holiday, you are going to have to wait until Tuesday.

You might find the balance you are transferring is already showing up on your new credit card. The old one still is showing a balance, too. Why is this? The new credit card company places the amount you are transferring as soon as it gets the request. Your old credit card company will not remove it until the payment is received from the new company and clears. There may be additional days of waiting if your old credit card company does not accept electronic payments and insists on a check.

How Do Balance Transfers Work?

A balance transfer is a process where you move the total amount due from one credit card to another. Credit card companies often charge 3% to 5% for these transfers, but you may find that some waive that fee as part of the introductory offer used to draw new consumers to their card. You most likely will not earn cash back or miles on your balance transfer but your new card may offer rewards for spending.

Start by researching different balance transfer credit card offers. Look at the introductory APR first and the APR it will switch to after the introductory period ends. You need to make sure the regular APR is not a lot higher than your current card. If it is, you must make sure you can pay off the balance owed during the introductory period or risk paying the interest rate once the introductory period ends.

Once you apply for a credit card and are approved, you will have to ask to transfer your balance from your old card to the new card. Give the credit card company the information on how much you owe, your account number, and the company. Your new credit card issuer adds that balance to your new account and submits the payment to the old credit card company for you.

Some companies provide you with some blank checks you can use to transfer balances on your own. Note that if you do get checks to do balance transfers on your own, it will take longer. You have to mail the check to your credit card company. That company must process it and wait for your new creditor to clear the check and submit payment to them. If you do the balance transfer this way, it’s going to take much longer than an electronic balance transfer request.

If you look at the major credit card companies, these are their estimates on how long it can take to process a credit card balance transfer. It all comes down to whether the transaction can be completed electronically or has to be completed by mail.

  • American Express – Up to 6 weeks
  • Bank of America – Up to 14 days
  • Capital One – 3 to 14 days
  • Chase – 7 to 21 days
  • Citi – 2 to 21 days
  • Discover – 7 to 14 days

When the old credit card company gets the payment, it is processed with other daily deposits to their bank. Once the money clears their bank, the amount is deducted from your credit card balance. It should pay it off completely, but that’s not a guarantee. It all depends on your payment due date and when the balance transfer clears. If the balance transfer does not go through before the next payment is due, interest is added to your credit card balance.

Say your balance transfer request is $4,000. The minimum payment is due on the 5th, but the balance transfer still has not happened. When it goes through on the 10th, monthly interest has been added to that credit card account. You do not have a zero balance. The balance still shows the interest that was added while the balance transfer was pending. It’s your responsibility to pay off that interest before the account balance is zeroed out.

Is There Anything You Can Do to Speed Up the Process?

One of the most important steps to take to make sure your balance transfer request goes smoothly is to double-check the information you enter. Make sure you have correctly typed out the account number. If you are even a digit off, it can mess up the entire transaction. At this point, the company has to contact you to get the correct information. If your carrier blocks potential scam calls or you do not answer out of habit, you will have to wait for a letter to arrive alerting you to the error.

When you request a balance transfer, make the request online rather than through a mailed application. Mailing times will slow down the process. Plus, there is the chance the mail will be lost on a desk or in transit. Electronic transfers take less time, and you get a message that the transaction has been accepted. Ask your current credit card company if they accept electronic balance transfers. This way, you will have a better idea of how long it is going to take and can plan accordingly.

What Should You Do if There is a Payment Due Before the Transfer is Complete?

If you have a credit card payment due and the balance transfer still has not cleared, make the minimum payment anyway. You do not want to have the payment show up as late or unpaid on your credit report. The credit card company may also charge late fees and over-the-limit fees may be added to the amount if the card was near the credit limit. You will end up with a second payment to make that can be substantially larger than you were expecting. That late payment may also show up on your credit report.

Make the payment on time, and it is true that you will end up with a credit balance. This is okay. You are not going to have a late payment showing up on your credit report. Plus, it is money that will be refunded to you. If you do not use your account or close your credit card account, it will be refunded to you at that point. You can also request the refund be mailed to you as soon as it shows on your account. It is often advantageous not to close the account. Cut up the cards and stop using them, but you will have an empty line of credit that can improve your credit utilization score. Ideally, you want your credit utilization to be 30% or lower.

Make Sure You Understand the Terms and Conditions

Before you put in a request for a balance transfer, make sure you understand the terms for the 0% or low-interest APR credit card. This can trip consumers up and cause problems down the road. If you apply for a credit card with a low APR, you have to make payments on time. Missing even one payment by a day may lead to the introductory rate being removed from your account. You will then have to pay the balance you transferred at the new APR and any introductory period you were given is also gone. That new APR could be higher than the APR on the card you just closed, so be mindful of this.

Say your balance transfer is $4,000 and you have the 0% APR for 18 months. To pay off the $4,000 within the 18 months, you would need to make payments of around $233 a month. If you do not, any balance that is left at the end of the 18 months is moved to the new, potentially higher interest rate. If that interest rate is higher than the other company would have offered you had you asked, you might not save any money.

Some cards have rules that balance transfers must be completed within a certain amount of weeks of your application approval. If the balance transfer has not been finalized by that deadline, the introductory interest rate expires. You need to keep track of how long it is taking. If you are a week or two from the deadline, start making calls and sending chat messages to find out why. You do not want to suddenly lose out on the lowered interest rate due to an error you made when you requested the balance transfer.

Research the low-interest offer thoroughly and understand possible transfer fees before you apply for a credit card. Keep track of the offer’s expiration date and make sure you are getting the balance paid off. When you follow those guidelines, a balance transfer card is a smart way to pay off high-interest credit cards and save a lot of money. If you are not certain of something you are seeing in the fine print, ask before you apply. It is better to take the time to ask questions and fully understand the pros and cons of a balance transfer offer.

If you are looking for a balance transfer credit card take a look at the selection we offer and apply for one if it fits your specific needs. Keep in mind the fees as well as the introductory period and any rewards for new purchases you make on the card. One final note, in order to be approved for a balance transfer you typically need to have good or excellent credit, so check your credit score if you have the ability to make sure you could be approved if you apply. If you have fair credit or lower, you should not apply as being denied may negatively affect your credit score.

The information contained within this article was accurate as of May 1, 2018. For up-to-date information on any of the terms, cards or offers mentioned above, visit the issuer's website. Many of the offers on this article are from our affiliate partners, and LowCards.com may be compensated if you take action with any of our affiliate partners.

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tracy

About Tracy Farnsworth

Tracy Farnsworth went straight from a business track in high school to a full-time job in mortgage banking in Burlington, Vermont. After having children, she built a freelance career in content writing and took online classes as time allowed. She completed Social Media Marketing and Digital Marketing certificate programs with Ireland's online Shaw Academy and completed several courses in SEO and analytics. In her free time, she's the “mom” to a very clingy rat terrier, and the pair walk at least a mile every day. She's also a novice baker who is trying to master the art of sourdough bread.