Credit cards can be helpful financial tools, but if you’re carrying a balance on your card from month to month, you’re accumulating interest that can make it difficult to pay down your debt.
If that sounds accurate to your current situation, you may consider transferring the balance on an existing credit card to a new credit card to save money on interest.
You’ve probably even gotten a credit card balance transfer offer from a credit union or bank in the mail that advertises an attractive 0% APR for a certain time if you transfer your current credit card balance to their card.
We’re here to help you learn what a balance transfer is and figure out if a credit card balance transfer is right for you.
What is a Credit Card Balance Transfer?
A credit card balance transfer allows you to move the amount of debt/outstanding balances from one (or more) credit card(s) to a credit card with a lower interest rate. The lower interest rate saves cardholders money as they pay down their debt.
Will a Credit Card Balance Transfer Affect My Credit Score?
Transferring your credit card balance is a beneficial way to pay down credit card debt, which will improve your credit score.
However, applying for several different cards and closing accounts or lines of credit can negatively impact your credit score. You can avoid negative marks on your credit score by researching multiple offers and only applying for one.
What should I look for in a credit card balance transfer offer?
Interest Rate
The card issuer may charge a fee to transfer a balance from one card to another. The amount of the fee will vary depending on the credit union or bank that issued the card, but it’s usually a percentage of the amount transferred to the new credit card. Search for a balance transfer credit card option that has no balance transfer fees at all times.
Balance Transfer Fees
Instead of demanding, “You need to do this” or “You need to stop that”, keep the focus on each doing your part to reach the goals you have set for yourselves. No one likes to be henpecked for their mistakes or shortcomings. If you are too negative, you risk creating a toxic environment around money discussions.
Annual Fees
An annual fee is an amount card issuers charge cardholders every year for having a credit card with that financial institution. The fee can range from $25 to $500 and are automatically charged to your card. Not all credit cards charge an annual fee, so we recommend that you shop around for a balance transfer card that offers a low or no annual fee.
Credit Limit
Your credit limit is the maximum amount of money you can spend on your credit card. This limit is set by the credit card issuer. Compare your existing balance with the credit limit on the new card to ensure your full balance will be able to be transferred entirely.
Introductory Period
A balance transfer credit card typically has a low or 0% interest rate for an introductory or promotional period. The window of time for these intro periods can range from 90 days to 18 months. After that, the interest rate could be just as high as your previous card. Avoid transferring a balance to a card with a small window introductory period.
Be sure to read and review your terms and conditions/agreement. Your balance transfer credit card APR may not apply to new purchases and charges.
Key Takeaways
Credit card balance transfers can be a great debt management tool, as long cardholders pay off the entire or most of the balance within the promotional period and use the balance transfer card wisely.
Like many financial decisions, it’s important to research your options carefully, read and understand the fine pattern to determine if the credit card balance offer is right for you.
Most importantly, remember to make your monthly payments on time.
Balance Transfers with AFFCU
If you feel a balance transfer is the right option for you, consider taking advantage of our limited time balance transfer offer. Open a new AFFCU Visa Platinum Credit Card and get 0% APR for 12 months with 3% Transfer fees!
Our Visa Platinum Credit Card doesn’t have annual fees. We also offer zero liability protection in case of fraud.
