When is a balance transfer a good idea?

To transfer or not to transfer? It’s a question most credit card holders are sure to ask themselves at some point, and it’s no wonder — most balance transfer offers are awfully enticing, with many featuring low or no interest for a period of time or even waived fees. But before you choose an offer and transfer your balance, we recommend asking yourself a different question: When does transferring a balance make the most sense? We’ve got a few suggestions to help you weigh your options and decide when to act. Let’s take a look.

When the interest is low (or zero!) and time frame is long. Simply put, a balance transfer is a type of credit card transaction in which debt is moved from one account to another. Usually this is done for the purpose of saving money in interest charges. With that objective in mind, the card you transfer to should ideally be one with an introductory 0% period (or as low a rate as you can qualify for) for as long a time period as possible (12 months is optimal) in order to save money in repayment charges.

When you would also save big on transfer fees. Often, credit card companies charge a balance transfer fee, and it could be up to 5% of the total amount transferred. If you are able to find — and get approved for — a “no balance transfer fees” offer, it’s definitely worth your consideration.

When you’re carrying a larger balance. Balance transfers typically take at least one billing cycle to go through. So, depending on the interest rate you’re currently paying, you may be better served to focus on paying off the balance if you can take care of it in the next month or two. However, if you’re dealing with an interest-bearing debt that can’t be easily paid off in the next three months (or the interest rate you’re paying is truly crazy), this may be time to consider a balance transfer — and a new card.

When you’re paying high interest. If the debt we just mentioned is attached to a high-APR card that is costing you major bucks monthly, that‘s reason for further consideration. A strategic balance transfer to a 0% introductory APR offer on balance transfers could eliminate those finance charges for the length of the offer, allowing you to save $50 to $100 or more in finance charges! And we don’t have to tell you that a savvy consumer applies that savings to their monthly payment, making that debt disappear even faster.

When you make your payments on time. Paying your bills on time is a good practice to get into regardless, but sometimes real life gets in the way. If this happens to you where credit card payments are concerned, a balance transfer may not be the way to go. That great — or even nonexistent — introductory rate is almost always contingent upon several factors that are outlined in your credit card agreement, and one of them is usually that payment is made on or before the due date. A missed payment could cause your interest rate to go up, putting you back at square one, only with a different card. A better bet is staying with your current card and arranging for automatic payments, at least until prioritizing this bill becomes second nature.

When credit cards are not an enticement to spend more. Some folks are tempted to transfer their existing debt to a new card and then, without the interest of the old balance looming large, continue spending with the new card and the old card. In that case, a new credit card may just be extending old habits, and you may be better off passing on the offer. However, If you view a balance transfer offer as a chance to pay off your credit card balance sooner and see the new card as a replacement (and a way to purchase items that you would be buying anyway, leveraging the reward points to increase your spending power), then your smart money attitude may find you a great offer with your name on it.

When the rest of your debt is manageable. If your revolving debt is keeping you from meeting other financial goals, and/or if you can’t see a way to pay it off in even the next five years, a balance transfer is just a temporary bandage rather than a step toward true financial wellness. You would be approved for a predetermined transferable amount, and if that amount is a fraction of what you owe, you would be better served to look at other options. You might consider a secured loan, such as a home equity loan or one secured by your car title, to consolidate your debt. Visiting with a nonprofit credit counseling service may also be a step in the right direction.

To recap, a balance transfer to the right card makes good sense if you have more high-interest credit card balance than you can easily pay off in the next few months, a reasonable amount of debt, and a fair amount of spending discipline. If you find a card that offers a great balance transfer rate for a doable time period, with no transfer fees, and the card itself is one you wouldn’t mind having in your wallet (look into any other current promotions or user perks), you may be on your way to a beautiful relationship.

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