Make Your Credit Card Balance Transfer Shine

There you are—sticking with your resolution to pay down your credit card debt. You’ve been doing all the right things—cutting expenses, tracking every cent, automating your savings and sticking to your plan—and you’re doing great!

Then you see it. It’s an ad for a competing credit card offering 0% APR on a credit card balance transfer. You may even get money back for completing the transfer. It’s so tempting to take the plunge.

Whoa! Hold your horses! This may be a great move, but you need to be sure you do the math before taking the leap. Luckily, Mountain America Credit Union has identified the top three mistakes people make when choosing a balance transfer.

1. Not shopping around.

   Of course, it would be easy to click on that first ad you see and fill out the form. But you’re not looking for easy—you want what’s best for your finances. Not shopping around could end up costing you more money. And isn’t the whole point of a credit card balance transfer to save money?

    

   Before you start comparing cards, you need to know what to compare with each. The Consumer Financial Protection Bureau recommends comparing four things: APR, APR for balance transfers, penalty APR and fees. We recommend starting your search for a new credit card at your current bank or credit union. Your relationship with them may give you an advantage for a better offer than you’d get with one you have no existing relationship with. You can then compare their offer with others you’ve seen online or received in the mail.

    

   You don’t need to spend an extended period of time researching, but take a few days to compare and shop around until you find the best features and best balance transfer card for your situation. For example, maybe you could find one that, instead of only 6 months, gives you 0% interest for 12 or 18 months.

   
    
2. Choosing the balance transfer offer when you could easily pay off your current balance.

   Trading in your high interest rate for something considerably lower sounds good, but you have to look beyond that. Take into consideration all the costs involved. Is there a transfer fee? Is there a cash advance or annual fee? Compare the interest you’ll pay on your current bill (assuming you don’t rack up any additional debt) to the amount of the fee(s). If you can comfortably pay your credit card balance in a fairly short time period, it may be worth it to stay where you are.

   
    
3. Not paying your debt in full before the offer expires.

   You’ll want to be wary of two things: adding more debt (oh, Xbox One X, I love you!), and blowing past your transferred balance deadline. A balance transfer is a useful tool to eliminate debt, not just a way to delay paying it. You can either tighten up your budget and make a payment plan so that you make more than the minimum payment each month, or you can set up automated payments by taking your balance and dividing it by the number of months the 0% is active. Then, set it and forget it.

    

   Like that feeling you get on Sunday nights, all good things must come to an end. This is true for the amazing transfer rate you received with your credit card balance transfer. Most introductory rates expire between 6 months and 1 year after signing up, so do everything you can to pay off your debt in full before the rate rises.

   
    

Bonus tips:

• Have good or excellent credit.

  To get the best balance transfer offer, you need good to excellent credit (a 700 or better credit score). If you don’t have at least good credit, now is not the time to do a balance transfer. Take steps to raise your credit score—like paying down your current balances—and then apply so you get better transfer terms. With many credit cards, your credit score affects how long you get 0% APR.

  
   
• Don’t use your brand-spankin’-new -low -interest as an excuse to max out your card.

  Do you know the specific reasons why you got into so much debt in the first place that you’re considering a balance transfer? If not, then simply switching to a credit card with a lower interest rate probably isn’t going to solve your debt-collecting problem. It’s more likely going to put you in a worse predicament than you were before the balance transfer.

  
   
• Read the small print.

  Sure that introductory rate is amazing, but how much interest is charged on new purchases and how long does it last? Many balance transfer cards only apply the promotional rate to the transferred balance, so anything new you buy collects a much higher interest rate. Also, check if there is a transfer fee or an early payment penalty. Credit card companies have to make money, and they do it by having higher interest rates on new purchases and charging fees.
   

If you’re looking for an easy and fast way to save money, then check out Mountain America’s MyBalance Transfer. Once you’ve completed your balance transfer, be sure to review our checklist of what to do after a balance transfer.

*Limit of two transfers from the same external account or financial institution. Total cash bonus cannot exceed 3% of the credit limit on your Mountain America Credit Card during the 2018 calendar year. Not available on business accounts or balances transferred from an existing Mountain America loan. Cash bonus is considered interest and will be reported on IRS Form 1099-INT. Offer expires 2/28/18.

**On approved credit. Variable annual percentage rate based on creditworthiness. Maximum interest rate over the life of loan is 18% APR. 1% foreign transaction fee. Membership required—based on eligibility.