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Is a Balance Transfer
Right for You?

Learn how balance transfers work and determine if it’s the right move for you.

What Is a Balance Transfer and When Should I Do One?

Has debt from a high-interest credit card become overwhelming? If you’re having trouble paying off your debt because of a high interest rate, a balance transfer to another credit card may be able to help.

Balance Transfer Basics

A balance transfer is a way of moving credit card balances from one account to another. This can be done by transferring outstanding balances on your higher interest credit cards to a lower rate card you already have. You can also apply for a new credit card offering an introductory rate, such as 0%, but keep in mind this could impact your credit score, especially if you’re not actually closing those other accounts. Here’s how it works:

1. Research different credit card options for balance transfers and apply for the one that best fits your financial situation. To complete a balance transfer, you will need a credit card from a different issuer. First look at other cards you already have to see if one has more favorable terms.  Typically, this means a lower APR. However, it’s important to evaluate all of the terms. If you are considering applying for a new card that offers an introductory or promotional rate for balance transfers, be sure to read the fine print. For example, how long is the promotional period, and what happens when it ends? Consider the standard APR after the promotion, and whether or not you will have to pay fees or back interest on any unpaid balances.

2. Once approved begin the balance transfer. Your credit card issuer will need information about the balance you wish to transfer, such as the lender, the amount, and other necessary information. If you’re transferring to a DCU Visa® Platinum Credit Card, you can initiate the transfer via Online Banking or Mobile Banking. From the Account Manager tab, select Balance Transfer and simply enter the card number and amount being paid off to submit the request.

3. Wait for the transfer to complete. Most transfers are completed in a few business days. Others may take several weeks, depending on how your previous credit card issuer handles payment processing. The balance of your old account may appear in your new account before it has been paid off, so be sure to continue making any payments that are due to your old account until you see it has been paid off.

4. Make payments. At this point, all that’s left is making payments on the new account. Be sure you have a plan for how you’ll make payments before you start the transfer process.

When to Do a Balance Transfer

A balance transfer can be a great way to make debt more manageable. But how do you know the right time to make the move? Here’s what to look for:

  • You need more time to pay off a debt. Are you temporarily out of work, but plan to resume work soon? It could be beneficial to switch your balance to a credit card with a lower interest rate. With less interest accruing, it can be easier to repay your debt once you’re better able to make larger payments.
  • You have a plan to tackle the debt. While a balance transfer can provide some debt relief, it doesn’t mean you should ease up on payments or start spending more. If you want to pay off your debt entirely, you’ll need a plan for how you’re going to make consistent payments.
  • You have good credit. To make a balance transfer beneficial, you’ll want to qualify for a credit card with a better rate than what you currently have. If your credit score is low, you might need to improve it by paying off more debt before you can qualify for a card with a better rate.

Ready to Tackle Debt?

Explore DCU’s credit card offerings with zero fees for balance transfers or cash advances. If you’re looking for extra help with managing debt, DCU members can speak with a credit counselor from our BALANCE program at no extra cost.

Please note, membership is required to open a DCU Visa® Platinum credit card.
 
This article is for informational purposes only. It is not intended to serve as legal, financial, investment or tax advice or indicate that a specific DCU product or service is right for you. For specific advice about your unique circumstances, you may wish to consult a financial professional.