Balance Transfer Checklist: Before and After
After the holidays have passed and the gift shopping is said and done, you may be left with a large mountain of debt to pay down. A balance transfer may be what you need to get back on the right financial path for the New Year. Taking advantage of a balance transfer could help you consolidate your debt into a single payment and possibly land you with a better interest rate. Follow our guide to know the steps to take before and after making a balance transfer.
What is a Balance Transfer?
A balance transfer is a transaction that enables you to move existing debt to a new credit card. Ideally, you want to move your debt to an account with the lowest possible interest rate. Some lenders even offer an introductory 0% interest rate to customers who transfer their balance during promotional periods. Balance transfers can be great to help consolidate multiple debt payments into one lump sum with one singular interest rate, making your payment more manageable by owing one lender rather than multiple lenders. In many cases, a balance transfer can save you money and overall help you take control over your growing debt.
Before You Transfer
While balance transfers can be helpful in the debt-payoff process, they’re not a magic solution. It takes commitment to get out of debt for it to be successful. Take these necessary steps to prepare yourself for the balance transfer process:
- Check your credit score. You want your credit to be in the best shape it can be before going forward with a balance transfer. Typically, the higher your credit score, the better terms you may be able to land with your balance transfer.
- Review your existing debt. Take some time to review any balances you hold. The great thing about balance transfers is that you can not only transfer credit card balances, but you can also transfer the balance of other loans as well. So be sure to review all of your current balances whether it’s from your credit cards or perhaps a personal loan you are looking to pay down.
- Compare balance transfer offers. It’s important to review all offers before moving forward with your balance transfer. You want to make sure that your new credit card has terms that will help better your finances, not make them worse. Does your potential new card provider offer a 0% APR balance transfer offer? If so, how long is the offer valid for? After comparing multiple offers, you should have a fairly goof list of potential card options for your balance transfer.
- Make your balance transfer. Once you have gathered the information needed to complete the balance transfer and made your selection on which offer you will take, you are ready to apply. It can take anywhere from 5 to 21 days to complete the transfer, depending on the policies of both the institution you’re transferring from and the institution you’re transferring to.
After You Transfer
Congratulations! Your balance transfer has been approved and you’re on the way to paying down your debt and improving your finances. Now what? In order for the balance transfer to be effective, there are some after-care steps that need to be taken:
- Make a repayment plan and stick with it. Your debt has been consolidated into one lump sum, so now it’s time to start paying it down. Create your repayment plan so you can work on chipping away at your total sum. Whatever our payment method, be sure to stick to it. Commitment and consistency are the key to making your balance transfer successful.
- Keep an eye on your credit score. Making on-time payments and paying down your balance can help improve your credit score. It may take some time, but keep an eye out and you will see improvement. Don’t give up and have patience.
It takes time and discipline to whittle away at high amounts of debt, but a balance transfers can help give you a leg up towards reducing that financial burden. As long as you maintain healthy financial habits by sticking to your repayment plan, you will be on track to pay down your balance. Learn more about the benefits of balance transfers to decide whether a balance transfer is the right choice for you.
At Robins Financial Credit Union, our mission is to enhance the financial well-being of our members and community. We honor this commitment by providing educational content to help you make the most of your finances. Read our other blog articles to help you gain the financial knowledge you need to succeed.