Balance Transfer Offers: How to Use Them Wisely

Sep 15, 2015 ​

Are you considering transferring your credit card balance? Sometimes, transferring your balance to a card with a balance transfer special offer can be a way to help you reduce your total debt faster. Keep these tips in mind.

Talk to your financial institution

Maintaining a good relationship with your current financial institution has many advantages: you don’t have to begin again with a new company, nor monitor the date a deal ends. Also, bouncing debt around with too many transfers can negatively impact your credit score, since part of your score is determined by length of credit history.

Get the best deal

Great deals do exist, like ones with low or no balance transfer fees, and balance transfers can definitely work to your financial advantage. After all, the lower the interest rate you are charged, the more of your payment is going toward the principal, allowing you to repay your debt efficiently. Look for balance transfer offers with:

  • Low or no annual fees
  • A low interest rate
  • The lowest introductory interest rate for the longest amount of time
  • Low or no balance-transfer fees

Understand the terms

As with all contracts, make sure you are aware of all the terms before you sign up, such as:

  • Offers that waive fees for "initial” balance transfers. Other transfers are treated as cash advances and are subject to fees and interest.
  • Unclear offers. Not everyone who gets an offer qualifies for the best rate.
  • Universal default. Late payments on other cards may raise your new card’s APR.
  • Limits on how long before you can make a transfer again.
  • The interest rate on new purchases.

Avoid overlooked due dates

Balance transfer paperwork takes a little while to process. Keep making payments on the old card while waiting for the transfer to take effect, which may take several weeks. Then verify balances on both your old and new cards.

Don’t get into further debt

Transferring balances makes the most sense when you are concentrating on repaying what you owe. If you keep the old card open and then use it to accumulate more debt, the benefit of the transfer is erased by a higher balance. Suspend use of the old card.

Assess your money management style

Do you struggle with money management? If so, then a balance transfer may not be your best option. To get the most out of transfers, you must pay on time. There might be other solutions to reducing your high credit card balances.

Consider your credit union

Find out from your credit union what offers are available and how you can benefit from a balance transfer. If a transfer isn’t your best option, a financial counselor will have ideas you can discuss. Call us at 505-889-7755 (800-347-2838 outside the Albuquerque area) to set up a financial wellness checkup. In addition, our calculators will help you get a clearer picture of your situation.

You can save money by taking advantage of low interest balance transfer offers. Just beware of the potential downsides, know what you are getting into, and transfer wisely.

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Nusenda Credit Union. The Power of WE®.

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