How Many Balance Transfers Can I Do?

Credit cards with high interest rates are raining debt down on America, but there’s a quick way to temporarily escape the storm.

Transfer the money you owe to a new credit card with a lower interest rate.

The strategy is becoming more popular as credit card debt rises. The average U.S. household carried a $7,951 balance in mid-2024, and almost one in five accounts were delinquent, according to the Federal Reserve Bank.

The average U.S. household also had 3.9 credit cards, which raises the question:

Technically, there is no limit to the number of balance transfers you can make, but that comes with some caveats. Here’s a look at the balance transfer game and how to play it.

What is a Balance Transfer?

A balance transfer is when you get a new credit card and move (transfer) the debt (balance) you have from another card (or cards) to the new one. Why would somebody want to do that?

The new card has an introductory period, usually 12-18 months, in which it does not charge any interest. Zero percent interest certainly beats 22.76%. That was the average credit card interest rate in mid-2024, according to the Federal Reserve. That was the highest average in 30 years, and many cards were higher.

First Premiere Bank Mastercard had a whopping 36% interest rate. Paying that much interest on purchases would be painful.  If you carried just a $1,000 balance on that card and made a minimal $40 monthly payment, it would take four years to pay off the debt and you’d be socked with $876 in interest.

Transferring that balance to a 0% card seems like a no-brainer. But there’s a lot more to think about before pulling the trigger.

Are There Limits on the Number of Balance Transfers?

Legally, you can make as many balance transfers as your heart or wallet desires. Financially, going transfer-crazy could be very risky. There are a few things to consider.

Credit card issuers usually charge a transfer fee of 3%-5%. You also can’t transfer more than the credit limit on the new card. And opening a new card means there will be a hard inquiry on your credit report. That will lower your credit score.

Benefits of Multiple Balance Transfers

Even with those potential drawbacks, a balance transfer can be a “Get Out of Debt Free” card if you play it right. It can lower what you pay each month, consolidate those payments into one and buy you time to dig out of your financial hole.

Debt Consolidation

If you have three or four credit cards, that means you are making three or four payments every month. Consolidating all that debt onto one card means one deadline and one payment to one source.

Well, it may not be easy. But having only one bill to deal with eliminates the multi-card juggling act. Debt consolidation should reduce some stress and make it easier to avoid late fees.

Interest Savings

Saving money on interest isn’t just the cherry on top of the balance-transfer sundae, it’s the entire dessert. The whole purpose is to escape those 25% (and higher) interest rates, making it easier to pay off the entire debt.

What might that mean in real savings?

If you had a $5,000 balance with a 25% interest rate and were paying $250 a month (5% of the total), you would pay $1,535 in interest in the 27 months it would take to pay it all off.

With no interest charges, you’d pay it off in 20 months and not pay a dime in interest.

Now that’s a cherry.

Financial Flexibility

Not paying a dime in interest should lead to many more dollars in your bank account. You should still stick to a budget, of course, but balance transfers will give you some financial breathing room.

You can use those savings to pay for everyday expenses, to build an emergency fund, or to pay off debt more quickly.

Drawbacks of Multiple Balance Transfers

Comparing a balance transfer to an ice cream sundae is legit, but there are potential drawbacks. If you’re not careful with them, the dessert could melt into a financial mess. Things to consider include the amount you must pay in transfer fees, what the new card will do to your credit score and whether you will use the new card to add – rather than subtract – from your debt.

Transfer Fees

A few credit cards won’t charge you a fee for moving old money to your new card, but those issuers are hard to find and usually come with a lot of restrictions. That means you are going to pay for the privilege of transferring money.

The balance transfer fee typically ranges from 3%-5% of the total. So, if you moved $5,000 to a card that has a 4% transfer fee, you’d pay $200 off the top.

With every balance transfer, get a calculator and crunch the numbers. If the money you’d save on interest is less than the transfer fee, it wouldn’t make financial sense to do it.

Credit Score Effects

Credit card issuers want to know if potential customers can pay their bills, so they check credit scores. That check is known as a “hard inquiry,” and each inquiry reduces your credit score 5-10 points. A new card often indicates the applicant is desperate and needs a fresh money source.

That’s the downside of opening a new card. The upside is a new card will increase the amount of credit at your disposal, often referred to as “credit utilization.

Credit utilization is the percentage of available credit you’ve used. It accounts for 30% of your credit score. The lower your utilization, the better your credit score because it indicates you are managing your money properly.

Short-Term Solution

When you transfer debt to a 0% credit card, it doesn’t magically disappear. All you’ve done is park it in a new garage. And the rates at that garage aren’t going to stay cheap.

Typically, the “introductory period” on the card is 12-18 months. It’s OK to enjoy the breathing room a balance transfer brings. Just remember, it doesn’t last forever. High interest rates – somewhere between 18%-25% — kick in on whatever balance exists when the introductory period ends.

If you’ve maxed out your credit cards, consider it a warning that you might need a long-term solution that addresses how you handle your finances.

How to Manage Multiple Balance Transfers

There’s no limit on the number of balance transfers you can make, but each one comes with a price and an additional element of danger.

Part of the price is the fee. Be it 3% or 5%, it applies to every debt you transfer from other credit cards. Another part of the price is the harm opening a new card does to your credit score. A “hard inquiry” will take 5-10 points off your score.

The danger comes if you don’t keep track of the details. They don’t call 0% an “introductory rate” for nothing. The “introduction” period typically lasts 12-18 months. When it expires, the interest rate will jump to 20% or higher.

Think all this through before jumping into the transfer pool. Devise a plan that allows you to pay off the balance before the interest rate skyrockets. Monitor your progress.

If you don’t, you may well end up back in the high-interest zone that drove you to make all those balance transfers in the first place.

Alternatives to Balance Transfers

For all their allure, balance transfers aren’t for everyone. Some people won’t qualify, and some that do might be better off trying a different approach.

Personal loan

You can get money upfront with a fixed interest rate and monthly payments. The interest rate will not be 0% (unless you have a very charitable relative or benefactor), but it will probably be far lower than the rate your credit card is charging.

A personal loan from a lending institution will have fees to set up. But unlike a balance transfer, there is not the standard transfer fee of 3% to 5% of the loan.

Debt consolidation

This is essentially a personal loan with a purposeful name. Instead of paying various credit cards with high interest rates, you get a loan with a lower rate and use the loan to pay off all your cards. That leaves you with just one monthly payment that is less than you would have been paying.

Credit counseling

If you’re looking for assistance with managing and reducing debt, credit counseling could be a beneficial option. A certified counselor will look at your financial situation and advise you on strategies to reduce debt. The initial session is usually free.

Smart Balance Transfer Decisions

Balance transfers are a proven way to escape credit card debt, but they don’t come with money-back guarantees. Proceed with caution, especially when you need to make multiple transfers.

That’s a red flag that you might need more than a stop-gap measure to get your finances in order. You might need to address underlying issues that have contributed to your debt.

Nonprofits offer credit counseling and plans like debt settlement and debt management programs.

In management, your debts are consolidated, your interest rate is lowered to 7% (sometimes less), and you make a monthly payment to the agency, which distributes the money to creditors.

Certified counselors at agencies like InCharge Debt Solutions will explain the options. They can also analyze your revenue and expenses and devise a budget. Then they’ll help you stick to it.

Whether you go with a long-term strategy or balance transfers, go with something. Paying 25% or more interest is no way to escape America’s credit debt storm.