Does a Balance Transfer Count as a Payment?


Balance transfer Q&A: “Does a balance transfer count as a payment?”

A credit card balance transfer works just like a normal credit card payment, except it’s made by a third-party, namely, another credit card issuer, instead of by you.

The third-party essentially agrees (with your consent) to pay off your existing debt with one or more credit card issuers and move that balance to their bank, in the hopes they can earn interest via costly finance charges.

Once the payment goes through, you’ll be able to see that a payment was made by viewing your statement and/or payment history. The payment information may include something about the bank (credit card issuer) that made the payment.

This is entirely normal and not a big deal. The credit card issuer doesn’t really care who made the payment, so long as someone makes it and it’s not fraudulent.

Let’s look at a balance transfer payment example:

Existing credit card balance: $2,000
Current APR: 19.99%
Balance transfer offer: 0% APR for 12 months, 12.99% thereafter
Balance transfer fee: 3%

In the scenario above, you’ve decided to accept a 0% APR balance transfer offer to save yourself some money.

Your current credit card balance is $2,000, and your next payment due date is in just one week.

You’ve requested that the balance transfer pay off the entire $2,000 once it’s executed, but that could take two weeks or more.

In this situation, it’s best to continue making the minimum payment on your existing credit card to ensure you aren’t late if the balance transfer isn’t completed within a week (how long do balance transfers take?).

You should never take chances, as balance transfers could be completed in a few days or a few weeks; it says so in the fine print.

And a missed payment could obviously hurt your credit score, not to mention result in a late fee.

If your next credit card payment isn’t due for several weeks after your balance transfer request, you can monitor the situation and wait for the balance transfer payment to go through before your next minimum payment is due.

Once the balance transfer is executed, assuming it’s for the entire existing balance on your credit card, you won’t have to make any more payments on the old credit card.

Tip: Using our previous example, you can make a balance transfer request for less than your existing balance, say $1,950, and make the remaining $50 payment to your old credit card on your own to avoid overpayment.

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