Featured Image You’ve probably seen a credit card ad promoting a great balance transfer offer. These offers can be intriguing, but you may be wondering: Is a credit card balance transfer a good idea for me?If done right, a balance transfer could save you money by moving your debt from a high-interest credit card to one with a lower interest rate.Here are our top six tips for determining when a balance transfer is the right move for your financial success.1. Make sure a balance transfer fits your financial goals and circumstancesBegin by understanding how much debt you have, what your current credit score is, and what your long-term goals are. These factors will help you not only determine whether a transfer is right for you, but what to look for in a new credit card provider.Ask yourself a few questions to determine if a balance transfer is a good step for you:How many monthly credit card payments do I currently have?What are the balances? What are the interest rates?If I consolidate my debt, could I pay off the full balance at a lower interest rate within the introductory rate period?A credit card balance transfer might not be a good plan for you if you are having trouble making your current credit card payments or are planning to apply for other major financing (say, a first mortgage or car loan) soon.2. Consider the advantages of a balance transferBalance transfers can offer various benefits, including:The interest savings from a lower rateThe opportunity to pay off debtThe ability to consolidate debtThe perks of a new credit cardOne important thing to know is that you need a good credit score to get the best rates, and you can take steps to improve your score before applying for a new credit card.That said, there’s no need to despair if you don’t qualify for amazing rates. There are other options to get your debt under control that might be a better fit for you, including leveraging your home equity if you own a home.3. Understand the credit card offer’s key detailsExtremely low and 0% interest rate offers are, no doubt, attractive. Understanding the key details of each credit card offer will help you make an informed financial decision.Here are some of the most important factors you’ll want to consider before applying:How long the introductory rate lastsIf the introductory rate applies to both balance transfers and purchasesThe Annual Percentage Rate (APR) when the introductory rate expiresAny fees, including annual and balance transfer fees — these are often 3% to 5% on the amount transferredThe credit card’s rewards and perks4. Run the numbers ahead of timeAfter you’ve considered all of these factors, you can run a financial analysis to determine if a balance transfer is a good option.Fortunately, there are some great online tools that will help you do just that.5. Know what to expect before you start the processIf you’ve never completed a balance transfer before, there are some details you’ll want to know about up front. Follow these steps to complete a balance transfer:Apply for your new credit card. You may be asked about a balance transfer within the application and can initiate it right then.Once you’re approved, you can initiate the balance transfer via your online account or call the number on the back of your card. You’ll need to provide details on the debt you are transferring, such as the card issuer, the account number, and the total amount.Balance transfers can take up to two weeks, so keep paying at least the minimum amount due until you see the transfer post on both your old and new accounts.When the balance is added to the new card, make an effort to pay the debt within the introductory period to save the most on interest.You’ll also want to monitor both credit card statements to confirm the transfer went through. You should see the charge for the amount transferred on your new card’s statement around this time. If the offer you choose includes a fee, you’ll see this appear on your statement as well.6. Maximize the benefits of your balance transferHooray! You’ve locked down a new card and completed your balance transfer. Make the most of this financial decision by making a plan to pay off the balance you transferred as soon as possible, and automate payments to keep you on track. Keep an eye on your credit score, and don’t close your old credit card right away, as having a history of accounts in good standing is a boost to your score. With that said, reduce or limit your use of other credit cards to stick with the goal of consolidating your debt.Managing your debt moving forwardIn the big financial picture, savvy moves with long and short-term debt can have an enormous impact over the span of your financial life.Done the right way, a credit card balance transfer can be a great financial decision. If you’re considering a balance transfer, take a look at what VACU’s credit cards can offer you.At VACU, you can choose from three great credit cards - each with competitive rates, awesome features, and no annual fee. Compare VACU credit cards
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The Credit Card Explained Together, we’ll walk through what to look for when shopping for a credit card, and what to remember once you’ve got your card.