When Doing a Credit Card Balance Transfer Makes Sense

When Doing a Credit Card Balance Transfer Makes Sense

If you’re carrying a month-to-month balance on your card that’s a bit too high for comfort, you’re in good company. The average card balance in Indiana is $4,796 according to Bankrate. This highlights the struggle many Hoosiers face: carrying a high balance month-over-month is a sure way to stack up interest fees and remove the light from the end of the tunnel. With the national average APR at 16.13 percent, carrying the average balance on your card from one month to the next adds to your debt load—especially if you’re only making minimum payments. One strategy to help get debt and compounding interest fees under control is to use a balance transfer credit card.

Here are three situations where a balance transfer credit card makes the most sense:

When you can avoid a balance transfer fee

Many balance transfer cards charge a fee for moving current debt from your previous card. Balance transfer fees typically add up to 3 percent or 5 percent of the total balance you transfer to your new card. This means that for every $10,000 in debt you move to a balance transfer credit card, you’ll owe $300 or $500. A no-fee balance transfer offer could help you save money while implementing this debt-reducing strategy.

When you can get a lower interest rate

The point of a credit card balance transfer is to save money while you reduce your balance and debt. If you lower your interest rate, and you make the same payments, you’ll pay off your debt faster. If your new card has a higher interest rate, that’ll only compound the issue. Take the time to familiarize yourself with your current credit card and interest rate before making a decision to transfer your balance.

Some balance transfer cards offer a low introductory APR, which may last somewhere between a few months to just over a year. When the promotional APR ends, your interest rate will likely rise to a something closer to the national average APR. Your new rate will then immediately apply to any balance you still have on your card.

Take the time to carefully weigh your options. Research lower interest credit card options, in the case you may not be able to pay off your transferred debt by the time the promotional period ends. Set yourself up with a budget plan so you can successfully manage your credit card debt.

When you have a payment plan in place

Transferring your balance to a new card can help you manage your debt, but it’s important to have a strategy to reduce the amount you owe. Without a plan in place, it could be all too easy to rack up a higher balance on your new card, thus perpetuating the problem.

To ensure your balance transfer pays off, lay out a roadmap for yourself. Determine how much you need to put toward your balance each month to get it down to zero in a reasonable timeframe. Here are some pointers:

  • Pay more than the total minimum required each month.
  • Don’t over-allocate money to debt repayment. If you shortchange yourself for necessities like groceries or rent, you may wind up relying on your card to pay for essentials.
  • If you have a card with a promotional rate that will end after a number of months note the date it ends. Try to have most, if not all, of your balance, paid off by the time the standard APR is applied.

Paying down your debt isn’t always easy. However, with the right tools, you may be able to make it a little less painful on yourself. A balance transfer credit card could be the right strategy for you, as long as it saves you money.

Contact us today to learn more about how a balance transfer could positively impact your financial well-being.

Balance Transfer Special

Melt your Debt

Transfer your high-interest debt. Savor s’more savings with a balance transfer to low-rate IFCU credit card. New and current card members welcome.

2.99% APR* for 12 Months^

No Balance Transfer Fees

Offer ends March 31, 2022

Balance Transfer Promotion ends March 31, 2022

*Annual Percentage Rate (APR). Promo ends March 31, 2022. The 2.99% APR promo rate applies to balance transfers to an IFCU credit card from a non-IFCU credit card. No minimum balance required. Purchases and cash advances excluded. ^Rate is good for 12 months from the first initial transfer, after which the APR will convert to the cash advance rate of 8.25%, 11.25%, 13.5%, or 14.5%, determined by VISA product and creditworthiness. The APR will be fixed for the Classic card and variable for the Platinum/Select card after promotion period ends. New and current cardholders are eligible. Credit card approval depends on creditworthiness and other qualifications. All Credit Union loan programs, rates, terms and conditions are subject to change at any time without notice. Call us at 765-771-8000 option 1 to talk to a consumer loan specialist for current rates, terms and conditions.

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