A Smart Way to Pay Your Credit Card Balance
Carrying a balance on a credit card with a high-interest rate means you are spending extra cash each month and not getting anything in return. If you are looking for a way to tackle your debt and save a little money, it might be time to consider moving a high-interest balance to a low-interest or 0% APR credit card by doing a balance transfer.
Create a Plan to Pay off Your Debt
Before you apply for a new credit card, create a plan to pay off the principle balance on your existing card. While moving your balance to a lower interest rate card can help you pay off your debt faster, transferring your balance doesn’t make your principle go away. Before you apply for a new low-interest or 0% APR credit card, do the math on your existing debt. As with any credit card, you’ll need to at least make the minimum payment each month on your new card. You’ll also want keep in mind is how you’ll pay off a large portion of your balance (or all of it) before the introductory rate is over.
When you are looking for a balance transfer card that fits your needs, you most likely won’t be able to transfer balances between cards from the same issuer. That means if you have a credit card with a high-interest rate through your financial institution, you might not be able to open another card with them to do a balance transfer.
Find the Right Balance Transfer Card
Not all balance transfer cards offer the same terms. When finding the right card for you, look to see if the card has a balance transfer fee. Some will charge you between 3% and 5% based on the amount of debt you transfer. While others won’t charge to transfer your balance from one card to another. Make sure to know the terms on the card you are looking to switch to so there are no surprises.
United Federal Credit Union’s U First Visa credit card offers easy balance transfers with no fee. The card offers introductory rates as low as a 0% APR intro rate for six months on both balance transfers and purchases. You can apply for the U First Visa online or in a branch near you.
When you’ve found the balance transfer card that fits your needs, you’ll need to apply for your new card. Once you’ve been approved, you’ll want to initiate the balance transfer. It could take two weeks or longer before your request is complete and your balance will show up on your new credit card statement.
Know the Fine Print
When you start making payments on your new card, make sure you don’t miss a payment. Some companies will end the promotional rate if you are late with a payment. Eventually, the introductory rate on your new credit card will end. Make sure you know what your new interest rate will be and be prepared to start paying interest on any remaining balance or any new charges you have put on the credit card after that period ends.
The Bottom Line
Doing a balance transfer can help you tackle your debt faster by helping you avoid paying high-interest rates for a few months. Make sure you do your research and compare credit cards to find the best option for you, and have a plan in place to start tackling your debt.