A balance transfer is a strategy that involves transferring the balance of a debt from one lender to another. This is done by having the new lender pay the balance off for the borrower, so the borrower now owes the new lender instead of the previous one.
Real-life application: Person A has a credit card balance of $5,000 with XYZ Lender that has an APR of 25%. Person A heard about balance transfers from the folks at Captain, and did some research to find that ABC Lender is offering 0% APR for the first 12 months with an initial transfer fee of 3% of the balance. Person A pays $150 in order to transfer their balance from XYZ to ABC, and they will enjoy 0% APR for the next 12 months.
Q&A: How do I do a balance transfer?