How does a balance transfer work?

A balance transfer is a type of transaction available for most credit card holders that allows them to transfer the balance from one credit card to another with a lower interest rate. This can help individuals save money on interest and help to pay off debt faster. In Oregon, balance transfers are subject to the state’s version of the Federal Credit Card Act, which regulates the terms and conditions of these types of transfers. This includes the maximum amount a cardholder can transfer, the maximum annual percentage rate that can be applied to the balance transfer, and the maximum amount of time the balance transfer may take. To initiate a balance transfer, individuals must first apply for a new credit card from a lender or bank that offers a lower interest rate than their current card. Then, the credit card holder contacts their current credit card company and requests that the balance on their card be transferred to the new one. Typically, the process takes a few days to complete and all fees associated with the transfer will be charged to the new card. Once a balance transfer is completed, the individual must pay back their new credit card at the stated interest rate. This rate is typically lower than the one applicable to their old credit card, helping them to save money on interest payments. Additionally, in Oregon, if the debt is not paid off within the designated period, the credit card company cannot raise the interest rate on the balance transferred.

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How does a balance transfer work?

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