From last minute vacations to holiday shopping trips, credit card debt can start to pile up for a lot of people. Because they typically carry higher interest rates, eliminating any debt you have accumulated on credit cards can have a big personal financial impact. One simple debt reduction strategy is a credit card balance transfer.
A credit card balance transfer is a quick way to put more of your monthly payment toward the card’s balance by moving outstanding debt to a card with a better interest rate. If you shop around, you can find a card offering a low interest rate, making a transfer an especially smart strategy when you have zeroed in on paying off the card’s balance in the near future. If you are looking to make a balance transfer, here is what to keep in mind.
Know your costs
One key factor to consider before the switch is the transfer fee a new card provider may charge. It is quite common for credit card companies to charge a balance transfer fee. This amount can really add up.
Depending on how much you are transferring, and how much lower the new interest rate is, the fee may not be a deal breaker, but it should always be factored in. Keep in mind while shopping around that some companies transfer the balance at no charge.
Also pay close attention to how long the introductory interest rate will last. Most transfers provide a very low interest rate for the first six months then step up to a more typical rate for the rest of the time you use the card. That is a great incentive to pay off as much of the balance as possible during this favorable window.
Get rewarded
Other considerations before switching are similar to those you would look at with any new credit card:
- Shop for a competitive interest rate after the introductory period
- Find a card with a credit limit that fits your needs
- Consider annual fees and penalty fees
- Try to find a card that offers membership rewards that benefit your lifestyle
The rewards on cards can include getting points for money spent and then redeeming the points for travel, gifts, credit toward your account, etc. Rewards can also include auto rental insurance, lost luggage coverage, roadside assistance, travel accident coverage, and travel emergency coverage. With the variety of credit cards in the market, you should expect many of these services after you have transferred your balance.
If you are looking for solutions to a high interest rate on your credit card balance, check out credit card balance transfers. It could save you money and help accelerate paying off the balance.
Choosing the right credit card is easier than ever. Whether you want to pay down balances faster, maximize cash back, earn rewards or begin building your credit history, Cobalt CU has the ideal card for you!
If you are looking to start a simple debt reduction strategy, a credit card balance transfer could be a good first step.
