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Top 3 Reasons to Take Advantage of Balance Transfer Offers

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If you are looking for a simple way to manage or pay off high-interest credit card balances, consider a balance transfer offer as an option to reduce or eliminate your debt quickly.

A balance transfer is a financial tool that allows you to consolidate debt with high-interest rates into a single loan with lower or even zero interest. When you consolidate several balances into one loan, you can take advantage of lower interest rates and one monthly payment versus multiple ones and pay off your debt much faster.

Let's look at how you can take advantage of a balance transfer to tackle your debt and achieve financial freedom.

Balance transfer benefits

A balance transfer can be more beneficial than simply taking out a loan at your credit union or bank to pay off debt. Below are the three main benefits you get from a balance transfer offer.

1.) Enjoy no or low interest

Low interest is one of the major balance transfer benefits. Balance transfer offers typically have a much lower interest rate than credit cards and personal loans. You can often find balance transfer offers with a promotional 0% interest rate for a set term, such as 18 months. When you take advantage of consolidating existing high-interest debt with a balance transfer offer that charges a low-interest rate, you save a lot on interest charges. If you are still unsure of just how much you can save with a balance transfer, take a look at the interest rates on your existing credit cards.

2.) Consolidate all your debts into one

With a balance transfer, you essentially consolidate several credit card balances into a single account. The benefit is that you will have one account balance instead of several credit card balances, as well as one monthly payment instead of several payments. In addition, having a single monthly payment will alleviate some of the financial strain that can come with having multiple credit card debts.

3.) Get out of debt faster

This is a common reason why people use a balance transfer. A balance transfer will help you get out of debt quicker. When you consolidate various debts into one, you will have only one account to manage. And, because the interest rate is much lower, you'll notice that your payment will reduce your balance more rapidly and more significantly than making the minimum payments on several credit cards.

To better understand how much you can save with a balance transfer, simply use this Debt Consolidation Calculator to see the difference in monthly payments.

Balance transfer terms and rates

Credit unions and banks offer balance transfer promotions, many with low introductory interest rates and terms of up to 18 months. However, it's also essential to look at the terms and rates once the promotion ends.

A balance transfer promotion will save you a lot in interest during the promotional term. But if the balance is not paid in full when the promotion ends, then you will need to pay the standard higher interest rate on your loan balance.

One thing that sets credit unions apart is the variable interest rates for credit card balance transfers. Once the transfer promotion's intro rate expires, the balance is capped at a much lower rate than banks and other credit card providers.

For example, the variable interest rate a credit union charges maxes out at 18%, while the variable interest rates that banks and other credit card providers typically charge can be as high as 25% and, in some cases, even higher.

Types of transferable balances

Balance transfers can be a useful tool for consolidating debt and saving money on interest charges, but it's important to understand the limitations and restrictions that may apply. The types of balances that can be transferred will vary depending on the credit card issuer's policies and terms and conditions. Typically, you can transfer balances from credit cards, store cards, personal loans and some other types of accounts.

It is also important to note that there may be restrictions on the amount you can transfer, and some accounts may not be eligible for a balance transfer at all. For example, some issuers may limit the total amount of debt you can transfer, either as a percentage of your credit limit or as a specific dollar amount. Additionally, some issuers may only allow you to transfer balances from accounts that are in good standing.

Another important point to keep in mind is that balance transfers generally cannot be used to transfer balances within the same card issuer. For instance, if you have two credit cards from the same issuer, you likely won't be able to transfer a balance from one card to the other.

Before applying for a balance transfer credit card, it's essential to review the issuer's terms and conditions carefully to understand what types of balances are eligible for transfer and any limitations or restrictions that may apply. This will help you make an informed decision about whether a balance transfer is the right option for your financial situation.

Factors to consider before making a balance transfer

Before applying for a balance transfer, here are some important factors to consider:

Payment schedule

You need to ensure that you can make your payments on the new card on time in order to avoid any penalties or fees. You should also ensure that you can pay off the balance before any promotional APR period expires. If not, you'll end up paying higher interest.

Reward programs

If you are looking to earn rewards, ensure your new cards offer reward programs that will accommodate your spending patterns and goals.

Penalties and late fees

Ensure you are aware of the new card's late fees and penalties, and make sure you understand how they work.

Balance transfer fees

Balance transfer credit cards sometimes charge a fee. Make sure you know what the fee is and factor it into the decisions you make going forward.

Credit limit

You also need to make sure the new card's credit limit is high enough to accommodate your transferred balance as well as any new purchases you plan to make.

Interest rate

The new card's interest rate should be lower than your current card's interest rate to ensure that the transfer is worth it. If the new card offers a promotional zero APR period, make sure you know when it ends and what the new interest rate will be after that period.

Start saving with us today

At Power Financial Credit Union, our members can take advantage of the best balance transfer promotions to help them get out of high-interest credit card debt. In addition to our low intro rates on transfers made within 90 days, our members can benefit from our rewards program, which has no blackout dates on travel, no annual fee and insurance protection.

Power Financial Credit Union serves almost 35,000 members in the South Florida area. Our members have easy access to secure and convenient financial services via mobile banking, as well as banking access through our shared branching network.

Ready to get out of high-interest credit card debt? Contact us now to take advantage of our best balance transfer offer and start paying off your debt faster. Speak to one of our trusted advisers and see how our low introductory rates, cash back and rewards program can benefit you. With easy access to secure and convenient financial services through mobile banking and our shared branching network, Power Financial Credit Union is the right choice for your financial needs. Don't wait. Reach out today and start your journey toward financial freedom.