Editor’s note: The claims, facts, and information in this sponsored article have not been verified by LDS Living, and LDS Living does not endorse any claim or product herein.
As you may imagine, I get a lot of financial questions from friends, family and even strangers. In the midst of the current challenging economy, it seems I’ve heard even more than usual. One of the most common is how to reduce debt—and I always recommend considering a balance transfer. It’s not right for everyone but, if used correctly, it can be a valuable financial tool. Here’s what you need to know:
What is a balance transfer?
A balance transfer is when you move an outstanding credit card balance (or a portion of the balance) from a high-interest credit card to a new, low-interest option. This helps ease the burden, giving you a chance to pay off your overall debt faster.
How does it work?
Although it seems simple, be aware that, to reap the most benefit, you have to play by the rules. The idea is that the transferred balance on the new credit card will accrue low or no interest during the introductory period—usually anywhere from 6–24 months. At the end of this period, the interest rate will increase.
Keep your debt payoff on track
Once you’ve chosen the balance transfer credit card you want, these tips may help you stay on top of your goals.
- Create a plan to pay off your debt in full before the introductory period ends—and stick to it!
- Pay on time to avoid additional fees.
- Start the transfer process quickly. Many cards only allow transfers in the first 60-90 days after opening your new credit card.
- Watch out for additional fees. Read your terms and conditions so you know what activities will result in a fee—like cash advances, returned payments or spending over your limit.
- Don’t close your original credit card account—keep the original credit card account open to lower your utilization rate.
- Strategize your transfer. Many balance transfer credit cards limit the amount you can transfer, so start with the credit card balance with the highest rate.
Used correctly, a balance transfer credit card can be a valuable financial tool to help manage debt and save money. Remember, finding the best balance transfer deal is about more than just an interest rate. Comparing all the terms to make sure it’s the right strategy for your budget makes all the difference
Editor’s note: The claims, facts, and information in this sponsored article have not been verified by LDS Living, and LDS Living does not endorse any claim or product herein.