There’s just something about the start of a new year! Maybe it’s because deep down we all enjoy new beginnings – the chance to start something fresh.
But at any rate, it’s usually a time of year where we reflect more, set goals, and think about things we’d like to do differently. Perhaps, you’ve resolved to pay down your credit card debt in 2018.
Like most people, you’ve probably noticed several banks in town promoting special offers, and you may be wondering if it’s a good idea to transfer your existing credit card balances to a lower rate card. Here are some of the pros and cons of any balance transfer:
What are the “pros” of transferring your balances?
There are many advantages to transferring your credit card balances:
- If you have high interest rate credit cards, you can transfer to a lower rate card and save hundreds (if not thousands) of dollars over time.
- You’ll only have one card to repay – eliminating the need to keep track of multiple payments, due dates, and avoiding late fees.
- You may be able to pay off your debt faster because your payment will go toward your balance and not paying off interest. This can help you improve your credit score over time.
- The new credit card may have better terms overall – from a lower rate to low or no fees (especially annual fees).
What are the “cons” of transferring your balances?
Transferring your credit card balances to a lower rate card has its advantages, but there are also some drawbacks:
- If your credit is average, it may not be worth your time.
- If you open a new credit card, it may negatively impact your credit score -- especially if your combined balances are over 30 percent of your new credit limit.
- Be aware of the fees charged to transfer your balance to another card. Some places will charge you a fee of up to 5 percent of the balance you plan to transfer.
- You may be tempted to use the available credit on your old cards, driving up even more debt. If you don’t have enough discipline to have that amount available, cut up your cards or close them out. If you close out a card completely, there’s a chance your credit history may take a hit if you’ve had the card for a while.
Look at how much money you’ll save in the long run if you transfer your balances. If you think you’ll be able to pay off your balances faster by transferring your balances, it may be worth your time.
How DuGood Can Help
Want to get on the road to financial freedom? We’re here to help! Here are a few of the perks you’ll enjoy when you transfer your credit card balance to DuGood:
- Low introductory rate
- No annual, cash advance, or over the limit fees
- Rewards for travel, electronics, jewelry, and more
- Free ID Theft Protection