Balance Transfer Definition: A balance transfer occurs when the balance on one credit card is moved to another. This may be initiated as a way to save money on a new credit card with a lower interest rate and fewer fees. It’s also an option for consumers with mounting debt on several cards who wish to consolidate everything they owe onto one card, which makes paying off the balance much easier.
The new card that receives the balance transfer may offer incentives, such as reward points or cash back. Some banks or credit card companies may offer zero fees or reduced rates for new customers who transfer their existing credit card balance to the new company’s card.