A balance transfer is the transfer of (part of) the
balance
Balance may refer to:
Common meanings
* Balance (ability) in biomechanics
* Balance (accounting)
* Balance or weighing scale
* Balance, as in equality (mathematics) or equilibrium
Arts and entertainment Film
* Balance (1983 film), ''Balance'' ( ...
(either of money or credit) in an
account to another account, often held at another
institution
An institution is a humanly devised structure of rules and norms that shape and constrain social behavior. All definitions of institutions generally entail that there is a level of persistence and continuity. Laws, rules, social conventions and ...
. It is most commonly used when describing a
credit card balance transfer.
How it works
Balance transfers allow people to move their balances from one credit card to another offering a lower interest rate for a set period of time.
The overall amount and the types of balances that can be transferred depends on the
credit card as well as
credit score
A credit score is a numerical expression based on a level analysis of a person's credit files, to represent the creditworthiness of an individual. A credit score is primarily based on a credit report, information typically sourced from credit bu ...
. Moreover, balance transfer should be done as per the timings allocated by the credit card company.
While many credit card issuers offer 0% interest balance transfers, some issuers also charge a transfer fee, which could range from 0–5%. As a result, consumers should evaluate the balance transfer interest rate during the promotional period, the length of the promotional period, and the balance transfer fee when deciding on which balance transfer promotion is best.
Types
There can be transfers between two similar types of accounts or different ones. These include:
*
Credit card accounts
*Bank
savings accounts
*Bank
checking accounts
A transaction account (also called a checking account, cheque account, chequing account, current account, demand deposit account, or share account at credit unions) is a deposit account or bank account held at a bank or other financial instituti ...
*Trading accounts at
financial institution
A financial institution, sometimes called a banking institution, is a business entity that provides service as an intermediary for different types of financial monetary transactions. Broadly speaking, there are three major types of financial ins ...
s
Transfers are sometimes facilitated by companies trying to recruit new
consumer
A consumer is a person or a group who intends to order, or use purchased goods, products, or services primarily for personal, social, family, household and similar needs, who is not directly related to entrepreneurial or business activities. ...
s. Sometimes transfers are accompanied by
transaction cost
In economics, a transaction cost is a cost incurred when making an economic trade when participating in a market.
The idea that transactions form the basis of economic thinking was introduced by the institutional economist John R. Commons in 1 ...
s paid by the consumer.
See also
*
Credit card balance transfer
References
{{Reflist
Accounting terminology