Credit card balance transfers enable a person to pay off his old bills by opening a new credit card. It can be considered as a refinance, as your old credit card balance is paid off, and you start off with a new credit card balance with a new rate and terms.
Let’s look at a quick example
Let us suppose that you have an American Express Card with a balance of $1,000 and a 20.99% APR. Whereas you can get a new Visa card with a credit line of $5,000 and 0% APR for 12 months.
If you choose the balance transfer offer using your new Visa card, you’ll pay off the $1,000 balance which you had with American Express with your Visa credit card, and the balance on your Visa card will become $1,000.
