Tempted by Low Balance Transfer Rate?

November 24, 2015 | White Rose Credit Union | Financial Wellness

Learn How to Manage Debt with a White Rose VISA Card

A stronger economy has consumers more comfortable taking on debt. And, it also means credit card issuers are more comfortable extending tempting balance-transfer offers, according to the New York Times.

Credit card comparison website CardHub looked at offers from 15 major issuers and found that longer zero-interest promo periods, up to 18 months, are available. After the promo period ends, card rates can rise substantially. With a household average of $7,126 in credit card debt, many consumers could save as much as $1,000 by transferring balances from high- to low-rate cards–with some significant caveats.

For one, fee-free transfers are rare. Most of the zero-interest offers charge at least 3% of the amount you transfer and some charge more. Absent a transfer cap–also now rare–you could pay $150 to transfer a $5,000 balance.

A smart balance transfer can help you pay off debt at lower interest rates, as long as you have the discipline and the cash to pay off the balance in short order. Instead of being tempted by a low transfer rate which quickly can sky rocket, your best bet might be to simply apply for a White Rose Credit Union VISA card.

Here are some other things to consider in a credit card balance transfer:

How can I avoid paying high interest on the transferred balance?

Pay the balance in full before the promotional period ends to avoid paying higher interest rates when the offer expires. If you make only the minimum payment and continue to carry a balance, or to add to the balance with purchases and cash advances, you will just perpetuate a cycle of debt.

Is everyone eligible for a zero-percent offer?

No. Card issuers offer these special promotions to borrowers with exceptional credit.

Can I transfer other debts to a credit card?

Some cards allow balance transfers of other types of debt, for example, car loans and even mortgages, as well as credit card debt. Credit card debt typically counts more on your credit score because it isn’t secured by collateral, so the shift could have a harmful effect on your credit standing. Car and home loans are available at far lower rates than credit cards so it makes little if any sense to make that kind of transfer.

If you’re attracted by a zero-interest transfer offer, make sure you also address your reason for being in debt in the first place. Beware of using the transfer as an opportunity to take on more debt.

Our senior member representatives are available to help you find the best sustainable rate on any White Rose Credit Union loan.



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