Balance Transfer
✓ Last verified 14 Sep 2026
The short version
A balance transfer moves an existing loan (or credit card debt) to a new lender offering a lower rate - genuinely useful if the rate gap outweighs the transfer/processing costs involved, but worth the actual math, not just the headline rate difference.
If a new lender offers a meaningfully lower interest rate than your current one, transferring the outstanding balance to them can reduce total interest paid over the remaining tenure. The catch: transfers often carry their own processing fee, and (depending on the original loan's terms) there may be no prepayment penalty to worry about on the exiting loan (see our prepayment penalty article) - but always compare the actual total cost, fees included, against simply continuing with the current loan, rather than acting on the interest-rate gap alone.
Want this worked out for your own numbers?