Is a Balance Transfer Right for You?
Q: I’m considering a balance transfer to a card with a lower interest rate. Is that a good idea?
A: Transferring some or all of your credit card debt to a card that includes a low-interest introductory period can help you move toward a debt-free life. Consider these pros and cons:
Pros
1. Lower interest rates for a time
Your most significant push for making a balance transfer is getting a break from the interest added to your balance. At Truity, you’ll save with a promotional 0% APR* for the first 12 months for balance transfers and cash advances; then, your variable APR will be based on your creditworthiness, currently 8.99% - 17.90% APR. Depending on the offer, that could mean a gap of 12 months to more than 18 months. Making a balance transfer will allow you to take a real bite out of your debt and make progress toward getting rid of it completely. For details, click here.
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2. Convenience
The more monthly bills you need to pay, the greater the chance of missing a payment. When you transfer balances and close those high-interest accounts, you’ll be able to consolidate several different cards into one, decreasing the number of monthly payments you need to make.
3. Motivation
Taking this significant step toward paying down your debt may motivate more careful spending habits.
Cons
1. You may not have enough time to get your balance to zero
At the end of a predetermined amount of time with your new card, your interest rate on the remaining balance will rise. While you may plan on paying down your balance before the interest rate kicks in, you may not be able to do so. You may pay a higher interest rate than the prevailing rate with some cards, but not at Truity. After Truity’s 12-month promotional period, you’ll pay 1.99% INTRO APR for the remaining 15 introductory months from the card-open date (if any), then your prevailing rate depending on your creditworthiness, currently 8.99% - 17.90%. The Terms and Conditions for your new card will spell out precisely what will happen after your introductory period. If you can’t transfer the entire balance for all of your high-interest credit cards, transfer the balance on the card with the highest interest rate.
2. Transfer fees
Most balance transfers charge a minimum of 3-5% of the balance you’re transferring; Truity’s balance transfer fee is $10 or 3%, whichever is greater. So, while you may not be incurring much interest, the transfer isn’t always free.
3. Negative impact on your credit score
There are many factors to consider when examining your credit score and ways to improve it. Having less available credit while using a small percentage of it is intelligent. Opening a new card without closing an old one means you will have more available credit, potentially lowering your score. Truity can help you weigh your options and assess your overall financial health.
If you’re sinking in credit card debt but don’t think a balance transfer is for you, we may be able to help. A personal loan might be a solid first step toward debt freedom. Call or come by your nearest branch location and let us help.
*0% promotional Annual Percentage Rate (APR) good on cash advances and balance transfers for Truity Visa® cards for 12 months. Promotional rate supersedes Introductory rate; your balance transfer rate will revert to 1.99% APR for the remaining 15 introductory months from the card-open date (if any), then to your low prevailing variable rate, currently 8.99% - 17.90% APR. A 3% balance transfer or cash advance fee will apply. Transactions must be made from 1/1/22-3/31/22. Offer excludes existing Truity balances. Truity Credit Union membership is required. This rate is good for members with qualified income. Refer to the cardholder agreement for more information. With approved credit.
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