Credit card debt is one of those things that can easily sneak up on you. This can especially be the case when you have high-interest credit cards in your wallet. Luckily, there’s a strategy you can use to get your credit card debt back under control and save money at the same time called a balance transfer.
A balance transfer is a term used to describe moving the balances from one or more credit cards to a new credit card (usually with a much lower interest rate). The transfers themselves are easy to complete. It often only requires filling out an application or calling your financial institution(s) to initiate the transfer.
Balance transfers are usually completed in order to save money on interest or help you better manage your credit card debt. To illustrate how a balance transfer works, review the following example.
Assume you have three credit cards with balances totaling $10,000. Each credit card has a different interest rate.
With a balance transfer, you can move the balances from each of your three credit cards to a new card with a lower interest rate.
Now you only have one monthly payment instead of three. Plus, your interest rate is much lower, allowing you to significantly save more on interest each month.
There are several reasons people consider transferring balances from one credit card to another. Let’s review a few of the top reasons:
While there are many perks to balance transfers, there are likewise precautions.
Balances transfers offer a convenient means to managing credit card debt and paying less in interest. However, this tactic should be used responsibly and in conjunction with a larger strategy to eliminate your credit card debt.
A few things to consider before transferring credit card balances:
On the surface, a balance transfer may seem like the perfect option to help you better manage your credit card debt. However, there are other options available as well, such as debt consolidation through a personal loan.
Please stop by any of our convenient branch locations or call 540-389-0244 to discover which strategy will work best for your unique financial situation. At Freedom First, our goal is to help you make the right decisions to ensure your financial success.