The Balance Transfer Download-Is it Worth it?

Are you tired of paying balances from multiple creditors every month or are you struggling with a sky-high interest rate? Consolidate debts from multiple accounts with a balance transfer. Simplify your finances by moving the balance from a card with a high interest rate to one with a lower rate and better rewards.

Sounds like a win-win, right? Not so fast, though. Consider the following when deciding if a balance transfer is right for you:

Look out for fees 
Why would a company offer a 0% interest rate? How do they make money? Many financial institutions charge fees that range from 3–5% 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 balance transfers with zero fees, so it pays to do your research.

Do the math
Identify how much you’ll save with a balance transfer through an easy-to-use calculator from creditcards.com. 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. Many cards offer 0% APR for up to 21 months! With discipline, this provides an opportunity to pay off your balance without accruing more interest.

Here’s the catch: You’re locked into a higher interest rate when the introductory period ends. In case you don’t manage to pay off your balance before the deadline, make sure that 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 if you get in a tough spot, but applying for multiple cards 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 or you might find yourself regretting the transfer.

Mountain America has some of the best credit cards out there. If you’re considering a balance transfer, or just want a card that fits your lifestyle better, check out this comparison chart or stop by one of our branches. We’d love to help you get started.