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I enjoy using credit cards, but I feel like credit card debt can be one of the most challenging to pay off. Credit card interest rates are often higher than personal loans and mortgages, which is why I try to keep my card balances low to save money on interest and maximize rewards.
However, last year I had to put nearly $5,000 on a credit card to pay some legal expenses quickly. My plan was to pay off the debt as fast as I could, but each month I could see the interest charges were taking on a life of their own.
Why I considered a balance transfer credit card
I used a credit card interest calculator online to determine how much extra I'd pay if I kept the $5,000 balance with my current credit card. My interest rate was just under 18% and if I only paid the minimum payment of around $125 each month, it would take me 273 months to pay off the entire balance.
In that time, I'd pay over $6,000 of interest — which is ridiculous seeing as it's more than the starting balance.
This prompted me to consider applying for a balance transfer credit card, so I started researching different credit card offers. A balance transfer is when you take your credit card balance from one card and transfer it to another card. The main benefit is that the new card should have a low or 0% APR offer for a certain number of months.
That way, you'll save money as you pay your debt off instead of paying the normal interest rate on your credit card. I settled on the Chase Slate® card (not currently available to new applicants) which at the time offered a 0% APR on balance transfers for 15 months. A few other features I liked about this card included:
How to transfer a credit card balance
The process of transferring a credit card balance is actually easier than I thought. I could see balance transfer options when logging into my credit card account online. I applied for the Chase Slate® card and was approved almost instantly for an $18,500 limit.
After opening my new Chase Slate® credit card account, I requested a balance transfer from my old, high-interest card through the 'Pay and Transfer' tab under my account on the Chase website. Once I set up the transfer by entering the credit card number and balance amount, it wasn't long before it was approved and the debt was automatically moved from my old credit card account to the new one.
What to watch out for if you're transferring a balance
Balance transfers can be a great tool to help you consolidate and pay off credit card debt faster, but there are a few important things to watch out for.
One of those is the balance transfer fee. Some cards will charge you anywhere from 3% to 5% of the balance or $5 (whichever is greater) to perform a balance transfer. At the time, my Chase Slate card did not charge a balance transfer fee so long as you requested the transfer within 60 days.
Another thing to point out is just because you apply for a balance transfer card and get accepted doesn't mean your transfer will automatically go through — you need to manually request the transfer just like I did. Most cards will want you to do this within a certain time period after opening your account. This is why I set a calendar reminder to request my credit card balance transfer as soon as possible.
The new credit limit amount you get approved for can also play a role in maintaining a good credit score. Since I had a balance of $5,000 to transfer, I was pleased to get approved for an $18,500 limit which means I was utilizing just around 27% of my credit limit. Had I been approved for a lower limit like $6,000, transferring a $5,000 balance would put me at a credit utilization rate of 83% and potentially hurt my credit.
Finally, it's important to keep in mind that the 0% APR offered by a balance transfer card may not extend to new purchases. This is why I made sure I focused on paying down my $5,000 credit card balance as soon as possible and not using my Chase Slate® card for new purchases for the time being. I didn't want to make my balance even larger by continuing to charge purchases to the card.
While the specific card I used for a balance transfer is currently not available to new applicants, there are many other cards with similar offers to choose from:
Would I do a balance transfer again?
If I ever found myself in a similar situation, I would definitely consider doing a balance transfer again. It's one of the best ways to consolidate credit card debt in my opinion because instead of settling for a low-interest personal loan, you'll have 0% for a limited time but can still save a lot of money this way.
The process of requesting the transfer and receiving the funds was pretty smooth. Plus I liked having the deadline to help motivate me to get rid of my credit card balance before the 0% promotional APR period ended and interest kicked in. I also liked how I wasn't pressured to make payments on months when other financial expenses came up and I couldn't.
Some months, I'd just pay the minimum on my credit card while other times, I could afford to pay more. Either way, I didn't get charged any fees or penalties and was able to pay off my $5,000 credit card balance in just 12 months.
While 0% interest rate credit card promos are not for everyone, you'll need to have the discipline not to overspend with your new card and focus on paying down your debt.
Choncé Maddox is a Certified Financial Education Instructor (CFEI) and personal finance freelance writer. She earned a Bachelor's degree in Journalism and Communications from Northern Illinois University and resides with her family in the Chicago area.