See how you could win a trip to the Olympic Games Paris 2024, courtesy of Visa.
Renovate your kitchen, pay off high-interest debt, or have access to emergency funds when you need it with an Alliant Home Equity Line of Credit.
Browse new and used vehicle inventory, and qualify for a rate discount when you buy!81
Separate each of your savings goals into an Alliant Supplemental Savings Account so you can visualize your progress.
By Ben Heinze
Credit cards can be a great tool, with their ability to help you build credit, earn rewards and make purchases easily. However, they also make it easy to rack up debt if you aren’t careful with spending or are in a financial bind. The high interest rate that comes with most credit cards means paying off that debt can be difficult, as a significant portion of your payment will go towards interest and not the principal. If you’re in this position, a balance transfer could be a great option to help you pay down your credit card debt.
To attract new customers and get more people to use their credit cards, financial institutions will offer a credit card with 0% APR for a limited introductory period on balance transfers. For the duration of the 0% APR offer period (typically between one to two years), you can pay down your credit card debt without paying interest.
Sometimes, a balance transfer fee is associated with the offer that will be charged when you make the transfer. This fee is typically around 3% to 5% of your transfer amount. There is also often a minimum amount you must transfer, but this is usually low, around $5 to $10.
Balance transfers often make sense if you have a lot of high-interest credit card debt. Not only is high-interest debt difficult to pay off, but the amount you pay in interest will likely be high regardless of your ability to pay. A balance transfer will help you keep more money in your pocket, provided you pay off as much debt as possible during the offer period.
Another benefit of balance transfers is that they simplify your finances. Keeping track of everything can feel overwhelming if you have multiple credit cards and carry a balance on each. With a balance transfer, you can consolidate your debt onto one card, giving you a clear view of your financial situation.
Of course, balance transfers aren’t the right fit for everyone. A lower interest rate doesn’t benefit you If you pay your credit card statements in full every month. And, if you have a small amount of debt, the cost of the fees associated with a balance transfer may outweigh the benefit of lowering your interest rate.
Not all balance transfers are made equal—there are a few key aspects you should take note of before deciding on any specific balance transfer offer.
Many balance transfer offers feature a 0% introductory APR, but this isn’t a given. With so many offers with a 0% offer attached, you shouldn’t have much trouble finding one. What’s more likely to vary between offers is how long that 0% APR lasts. Longer is better, but shorter offers are fine, provided you feel confident you can pay off your debt during that time.
If you can find and qualify for a no-fee balance transfer offer, consider taking that. Otherwise, compare the fees of the balance transfer offers you find to see if there is one significantly lower than the others. 3% fees are typical, but you may find fees higher or lower than that.
Beyond the balance transfer offer, credit cards can come with a variety of other benefits. While you should prioritize the best balance transfer offer, if multiple offers are equally good, you can use their benefits as a tiebreaker. Other benefits include rewards/cashback, fraud protection, digital wallet compatibility and no foreign transaction fees.
What the balance transfer process looks like
Once you’ve decided on a balance transfer offer, there are a few simple steps to complete in order to take advantage of it:
While balance transfers can be a helpful tool to pay off debt, it can be easy to find yourself in the same position of needing another balance transfer down the line. Sometimes, emergency life circumstances result in an unforeseeable financial bind. For others, credit cards make it easy to overspend on non-essential luxuries. Budgeting and building an emergency fund can help avoid future high-interest debt. If you’re looking for help paying down high-interest debt, balance transfer offers are something to consider. Not only do they simplify your finances, but paying down high-interest debt without the large interest payments will give you a huge advantage in improving your finances.
Learn more about credit cards:
Ben Heinze is a marketing content specialist with a passion for financial education. Instilled with a strong sense of frugality from a young age, he views money as a means to building the life you want, rather than an end in itself. From reading Money Mentor, he hopes you discover new ways money can be used to build your ideal life—whatever that may look like.
Get even more personal finance info, tips and tricks delivered right to your inbox each month.
Thanks for subscribing to Alliant's Money Mentor newsletter! You will now receive personal finance tips in your email inbox each month.
You are leaving Alliant’s website to enter a website hosted by an organization separate from Alliant Credit Union. The products and services on this website are being offered through LPL Financial or its affiliates, which are separate entities from, and not affiliates of, Alliant Credit Union.The privacy and security policies of the site may differ from those of Alliant Credit Union.
You are leaving an Alliant Credit Union website and are about to enter a website operated by a third-party, independent from Alliant Credit Union. Alliant Credit Union does not manage the operation or content of the website you are about to enter. Alliant Credit Union is not responsible for the content and does not provide any products or services at this third-party website. The privacy and security policies of the site may differ from those of Alliant Credit Union.