What is a Balance Transfer?

The process of taking an outstanding balance (or balances) from one (or several) credit cards and moving it to another credit card account offering a lower annual percentage rate (APR) and/or other incentives. By transferring the balance from a higher-APR credit card to a lower-APR card, a cardholder may save money. However, there may be fees associated with the transfer, and the lower APR may be introductory only and have a higher interest rate once the introductory period expires. Only the balance transferred is typically eligible for the lower APR; additional purchases made with the balance-transfer card may be subject to a higher APR.