It happens all the time – you’re out shopping at your favorite store, and once you arrive at the register, you get asked to open a store credit card. The offer to save 15 or 20% on every purchase sounds great, right? Before you know it, you’ve signed up for one, two, or ten new credit cards. Next thing you know, it’s a couple years down the road, and you’re drowning in credit card debt. It can feel like there’s no way out.
It may feel hopeless, but it’s not. We’re here to help. For many, a balance transfer is the right tool to get back on their financial feet. Here’s what you need to know.
What Is A Balance Transfer?
A balance transfer is pretty simple. You just use one credit card to pay off one or more of your other cards. The trick is to transfer from your high-interest cards to a low-interest alternative. This means more of your monthly payment goes toward getting you out of debt.
How Does A Balance Transfer Work?
With Honor Credit Union, the balance transfer process starts when you apply for one of our credit card options. Once you’re approved, we’ll work with you to gather a few details and send a payment directly to your other creditors. Then, you just keep making the payments on your new card.
Consider An Honor Balance Transfer
Choosing The Right Credit Card For A Balance Transfer
When you’re shopping for a card to transfer your balance to, there are three factors to consider.
Interest Rate
Choose a new credit card with a low-interest rate. Or, look for a card that’s offering an extended period such as 12 months with little to no interest on the balance transfer itself. Even if you have plans to pay off the balance during a promotional time period of little or no interest, do yourself a favor and review what your interest rate will be beyond this timeframe as well.
Balance Transfer Fees
Some cards charge high fees for balance transfers such as 3-5% of the total transferred balance. These fees can add hundreds of dollars to your debt, so it’s important to look for a card option that has no balance transfer fees at all times, such as Honor’s Select and Select Rewards options.
Annual Fees
If you’re in the market for a balance transfer, avoid cards that charge an annual fee, period. Your goal is to pay off high-interest debt, not add to it, and adding an annual fee should not be part of that strategy. Here at Honor, we want what’s best for our members, so not a single one of our card options carry an annual fee.
Should You Use The New Card Regularly?
This is entirely up to you, but if you’re struggling with debt, we recommend that you use your new card as little as possible in an effort to shrink your existing debt.
The Benefits Of A Balance Transfer
Using a low-interest balance transfer to get rid of your high-interest consumer debt makes sense. You’ll get out of debt sooner, have just one payment, and may even improve your credit score.
The big credit card companies make all their decisions with computers and algorithms. At Honor Credit Union, we’re different. When you apply to transfer your balance to an Honor credit card, you work with a real person who is here to listen to your story and offer advice. We’re here to put you on the road to financial success. If you feel like you’re drowning in credit card debt, Honor’s balance transfer option may be the lifeline you need. Apply online or give us a call today at 800.442.2800!
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