Balance transfers are a great way to save on interest charges. When you do a balance transfer, you are essentially transferring the full or partial amount of your debt from one credit card (Card A) to another (Card B).

In essence, Credit Card B makes a payment to Credit Card A on your behalf. As a result, your balance on Credit Card A is paid down by the amount of the balance transfer that you requested.

Credit Card A does not charge the cardholder (i.e. you) any fees as a result of the balance transfer, since for them it is the same thing as receiving a payment. Instead of receiving a payment from you, they simply receive the payment on your behalf from the issuer of Credit Card B. Credit Card B will most likely charge the cardholder (i.e. you) a transfer fee. Most commonly, transfer fees are 3 percent of the amount transferred.

No credit card company can prevent any cardholder from transferring a balance from one of their cards.

It is important to note that in most cases you should not make any purchases with a balance transfer credit card. Anytime you revolve a balance on a credit card, there is no grace period for purchases, which means that unless your card offers 0% on purchases, any purchase you make will begin accruing interest immediately. Obviously, no one wants purchases to be more expensive than they have to be, so use a different credit card for making everyday purchases and earning rewards, at least until you pay off your transferred balance.

Last but not least, make sure to compare balance transfer credit cards in order to make sure you get the best deal.