- A balance transfer works by moving the amount owed on one account to another account. So, there must be two accounts for a balance transfer to work: the receiving account (does not currently have the balance) and the delivering account (currently has the balance).
- A balance transfer is a function of the account that will be receiving the debit. As such, there is no reason for the delivering account to assist in making any sort of transfer happen. Instead, the institution that handles the receiving account will send funds to pay off the balance at the delivering account. This can be done via check (paper or electronic) or via an inter-banking network.
- Having paid off the old account for the customer, the financial institution handling the receiving account is now owed an equivalent amount of money, and so, a debit is added to the receiving account in the amount of the pay off to the delivering account. The balance transfer is complete.
