Your Guide to Balance Transfer Credit Cards: 4 Things to Watch For

4 MIN. READ

 

Key takeaways:

 

• If you have credit card debt and are spending too much on interest, it’s time to look into a balance transfer.
• Watch out for APRs that go up after the introductory period, balance transfer fees, and cards with limited credit lines.
• Power Financial Credit Union offers two credit cards with attractive balance transfer options.

Making credit card payments to a high-interest account is frustrating. You’re doing your best to pay more than the minimum to get out of debt, but your high APR makes getting ahead difficult.

If this sounds familiar, it’s time to look into opening a balance transfer credit card. It’s easier than you might think, and it’s a great way to refinance or consolidate debt to save on interest. Here’s how it works, and what to look for when comparing balance transfer offers.
 

What’s an Introductory APR?

Most balance transfer credit cards offer an introductory APR. It means you’ll get a low interest rate for anywhere from 6 to 21 months, depending on the card you choose, and your interest rate will increase after that.

Securing a low APR means getting lower credit card payments or being able to pay more toward what you owe, but there are a few things to keep in mind:
 

• Discover how long the introductory APR rate lasts and what it increases to after that.
• Can you realistically pay off your debt before the interest rate increases?
• Does the low introductory APR apply only to the balance transfer or to both the balance transfer and new purchases?

Watch for Balance Transfer Fees

Balance transfer fees are usually a percentage of the amount you’re transferring, and they can be as high as 5%. You won’t have to pay them right away, but your new credit card company will tack them onto your balance.

If you’re looking into balance transfers to save on interest, consider whether the balance transfer fee is low enough to really allow you to save.

Credit Limit for Transfers

Like any other credit card, balance transfer cards have a credit limit. If you only qualify for a small credit line, you might not be able to transfer your entire debt to this new card.

You can still do a partial balance transfer to save on interest, but there are a few strategies to consider if you find the credit limit too low:
 

• Look into a balance transfer card with a slightly higher introductory APR. The credit card issuer might be willing to compromise and offer you a higher credit limit.
• Credit unions can be a good option. They often have balance transfer credit cards and can offer more favorable terms compared to large banks.
• Pay off as much of your debt as possible before applying for a balance transfer card to lower your debt-to-income ratio.

Other Fees and Considerations

Before applying for a balance transfer credit card, take a few minutes to review the card agreement. If you’re having trouble finding it, look it up in the Consumer Financial Protection Bureau's database or contact the company issuing the credit card.

Watch out for these things:
 

• Are there any annual fees for the card?
• How much is the late payment penalty?
• Are there any other hidden costs?
• Most balance transfer offers are valid if you complete the transfer within a window of time. Find out what it is.
• If the card comes with rewards, make sure you’ll actually use these perks.

Transfer High-Interest Credit Card Balances With Power Financial Credit Union

At Power Financial Credit Union, we offer two credit cards with some great balance transfer options. We’re able to offer low APRs because we’re a credit union. It means we’re not a for-profit organization and can afford to charge less in interest and fees compared to major banks.

Additionally, we value our members and take the time to carefully review each application. Even if you don’t have great credit, something like a strong employment history can play in your favor.

The two credit cards we offer for balance transfers have their own perks.

Stop spending so much on interest. Contact us to learn more about these balance transfer options or visit one of our South Florida branches.
 

FAQs

 

How long does an introductory APR typically last?

Introductory APR periods usually range from 6 to 21 months, depending on the card. After this period ends, the interest rate increases to the card's standard APR.
 

Are there fees associated with balance transfers?

Most balance transfer cards come with a transfer fee, typically 3-5% of the balance you're moving to the new card. However, some cards, such as Power Financial Credit Union's Visa Platinum Credit Card, offer balance transfers with no transfer fees.
 

How much debt can I transfer to a new card?

The amount you can transfer depends on the credit limit you're approved for on your new balance transfer card. If your limit is lower than your total debt, you can still do a partial transfer to save on interest for that portion.