Try a Balance Transfer for a Debt-Free 2019

By Sharon Cook, senior vice president of Marketing and PR, Mountain America Credit Union

Being raised in a family business meant that I was schooled on money matters from an early age. It’s really no wonder I ended up working in the financial industry—I find it utterly fascinating! In my career, I often get asked financial questions. One topic that comes up frequently is how to pay down debt.

I always suggest looking into a credit card balance transfer. This option allows you to consolidate debt from multiple accounts into one, easy-to-pay bill. Not only can it simplify your finances by reducing the number of monthly bills, but the lower interest rate can save a lot of money.

Sounds like a win-win, right? Maybe—it’s important to evaluate everything when deciding if a balance transfer is right for you. Here are some things to consider:

Watch out for fees. A zero percent interest rate may make you ready to sign on the dotted line. Be sure to read the fine print, however, as many financial institutions charge fees ranging from 3–5 percent of the balance being transferred. These fees are applied when you make the transfer and can negatively impact your total balance, so shop around! Some financial institutions, like Mountain America Credit Union, offer no balance transfer fees.

Do the math. Identify how much you’ll save with a balance transfer through an easy-to-use calculator. Compare the savings you’ll net from different transfer offers before applying.

The rate switch. One of the obvious perks of a balance transfer is the introductory interest rate. Some cards offer zero percent APR for up to 21 months. With discipline, this provides an opportunity to pay off your balance without accruing any interest.

Here’s the catch: You’re locked in to a higher interest rate when the introductory period ends. If you don’t pay off your balance in full before the deadline, make sure the new interest rate isn’t higher than the rate on your current card.

Read the fine print. Credit card companies make balance transfers profitable by offering low or no interest rates on the transferred balance but a higher rate on new purchases. Verify which purchases this awesome introductory rate applies to up front to avoid this costly mistake.

Don’t make it a habit. A balance transfer can save your financial bacon in a tough spot but applying for multiple cards at once will hurt your credit score. If you decide to take the plunge, make a commitment to budget, save and pay your debt off quickly.

Balance transfers can be a powerful tool to consolidate debt quickly while saving money. But buyer beware: as with all financial decisions, compare offers carefully and watch for hidden fees so you don’t regret making the transfer.