Seven Tips for Credit Card Balance Transfers

Credit card balance transfers can save you money!

A well-planned credit card balance transfer can help you save money on interest and reduce the time needed to pay off your credit card bill. Remember, transferring debt isn’t the same as repaying debt. You still have the debt, just on a different credit card. Here are a few things to keep in mind when considering a credit card balance transfer:

1. Keep balance transfer fees in mind. Often balance transfers involve a fee, though, WESTconsin’s Platinum Visa credit card offers balance transfers at no fee. If the card you are considering transferring to does have a transfer fee, the upfront cost of this fee can seem high. However, moving to a lower rate card can potentially save you more money in the long run and may offset the cost. Use a credit card payoff calculator to determine the potential savings a lower rate can save you.
2. Consolidating your credit card debt into one card can make managing your finances easier. Simplifying your debt may help avoid late fees that could be more likely to occur when trying to pay multiple cards. It will also give a clearer picture of how much credit card debt has accrued and make it easier to determine if you can handle future credit card purchases.
3. Consider all of the rates and fees of the credit card. What is the annual percentage rate? Is it an introductory rate? Is the rate different for purchases, transfers, and cash advances? Are there annual fees? What are the penalty fees? Plus, you’ll want to make sure to read the fine print! Determining how long you will have a balance will help determine which rates and fees will be the most important factor in making your decision.
4. Take rewards programs or other incentives into consideration. For example, our WESTconsin Platinum Visa offers a free rewards program where you can earn points redeemable for merchandise, gift certificates, travel rewards, and cash back as a statement credit. Another advantage of a WESTconsin Platinum Visa is a potentially lower credit card rate if you are a Silver MVP or Gold MVP member.
5. Avoid credit cards with an indeterminate 0% period. For example, the transfer may be advertised at a 0% rate on balance transfers for 6 or 12 months. If you are not provided with the length of time before making your balance transfer, you may find that it is shorter than you need.
6. You may want to leave your old credit card account open unless it has an annual fee. Closing credit cards will shorten your credit history and decrease your available credit limit, which can possibly have a negative impact on your credit score. However, if you want to be certain that you will not charge purchases to these cards again, it may be in your best interest to close them.
7. Keep in mind what transferring credit card debt will do to your credit score. The effects will be different if you transfer to an existing card compared to opening a new card. It also makes a difference whether you are using a substantial portion of the available credit or not. You will need to compare the potential effects to your credit score versus the potential to save money and pay off your debt faster. Plus, paying down debt can have a beneficial impact on your credit score in the long run.