For smaller card balances you can pay off within months, a promotional balance transfer can cost less than refinancing your home.

How balance transfers work

A card issuer offers a low promotional interest rate on balances moved from other cards, for a limited period. There’s usually a transfer fee, a percentage of the amount moved.

When they can win

  • The balance is small enough to pay off during the promotional period
  • Your credit is good enough to be approved
  • You don’t want legal, appraisal or penalty costs
  • You don’t want to secure the debt against your home

The traps

  • The promotional rate ends, and the regular rate is usually high
  • Transfer fees add to the balance
  • New purchases may be charged at the regular rate
  • A missed payment can cancel the promotion

When a mortgage is better

Larger balances that will take years to repay, or damaged credit that rules out good card offers. See what is a debt consolidation mortgage?

A simple test

Divide the balance by the number of promotional months. If you can pay that each month, a transfer may work. If not, compare a consolidation mortgage. See the math.

This article is general information, not financial or legal advice. Lender requirements, rates and fees change and depend on your situation.