What are the Benefits of Balance Transfers on Credit Cards?
Many of us begin with “starter” credit cards when we want to build credit as young adults. However, as we establish our credit history and build up our savings, lenders become more willing to approve for credit cards that offer competitive rates and other perks like rewards for spending. Transferring your existing debt to one card with a balance transfer is a great way to help you pay down high-interest debt and improve your credit score. There are a number of benefits to transferring your credit card balances, including:
Getting a lower interest rate is the biggest reason you would want to transfer your credit card balance. The lower the interest rate, the more you save by transferring your balances. You can either pocket the extra cash or increase the amount of your monthly credit card payments to help bring your debt down even faster. If the lower rate is part of a limited-time promotional offer, make sure you know how long that rate will last and what the new rate will be when the promotional period expires. A good rule of thumb with balance transfers is to get the balance paid off completely by the time the promotional period ends.
Consolidate Debt for Faster Repayment
Another key benefit of balance transfers is the ability to move debts from multiple credit cards to one single card. If you’re struggling to make payments on multiple credit cards each month, each with different due dates and minimum payment amounts, transferring your balances simplifies your payment management process. Streamlining this process with one due date and a lower interest rate will allow you to pay even more towards reducing your debt and you’ll get it paid down much faster.
Transferring your credit card balances can make your financial life so much easier to manage. Many people have multiple credit cards, each with differing balances, interest rates, and payment schedules. Consolidating your debt onto a single, lower-interest card can help reduce the stress of tracking these details and may even make it easier to ensure payments are made on time. Although moving debt is not the same as repaying it, transferring your existing balance to a card with more favorable conditions can help you reclaim control of your debt.
If your current credit card has excessive fees, a short billing cycle or grace period, or rewards you don’t use, it’s not doing you any favors. Reward yourself with a credit card that works for you with features and benefits that will actually help you.
Improve Credit Score
One major factor in calculating your credit score is your credit utilization. This is the percentage of credit used out of the total credit available to you. The lower your utilization percentage, the more likely you are to earn a higher credit score. Transferring your debt to a new card reduces your overall utilization, thus paving the way toward a better credit score.
Our Robins Financial Credit Union Visa® Platinum Rewards Credit Card gives you premium purchasing power with no balance transfer fee or annual fee, and we offer convenient payment options to help make your life easier. If you’re considering a balance transfer, check out our Credit Card Payoff Calculator. If you’re ready to make the transfer, you can apply online or make an appointment at any of our branch locations and start taking control of your credit card debt.