Is a Balance Transfer Right for You?
How do they work?Balance transfers allow you to take your high-interest loan or credit card balance and transfer it to a credit card with a lower interest rate for an introductory period, usually about 12 months. The lower interest rate lets you save money on interest over time while putting more toward your principal balance. You'll also benefit from consolidating several balances into one balance, leaving you with fewer due dates and payments to keep track of.
Is it worth it for you?There are a few things to be aware of before you commit to a balance transfer. It's important to consider these before you decide if a balance transfer is right for you:
- When the promotional rate ends. Most balance transfer cards have a low promotional rate to entice you to switch your balance. Be sure you know when this rate ends and what it will change to when it does!
- Whether or not there's a balance transfer fee. When you transfer your balance, there may end up being a transfer fee for the transaction. These generally run between 3-5% of the transferred amount. Despite this fee, the long-term savings from your balance transfer rate will usually outweigh the upfront cost of the fee.
How do I get started?
In order to transfer your balance, you first have to get approved for the credit card you’re transferring to. Some cards may still require you to have good credit in order to get approved.
If you’re not sure where you stand with your credit, or want to get your ducks in a row before making a final decision, we can help with our Financial Wellness Plan.
If you’re up to date on your finances and are ready to apply, then get started! You’ll start a credit card application as normal, and once you’re approved, you can apply for a balance transfer. The actual transfer process can take some time to complete, so be sure you stay on top of your current credit card payment to avoid any potential late fees.