What to consider before you transfer debt from one credit card to another.

If you carry a balance on your credit card, you might wonder whether a balance transfer is a good idea for your situation. In some cases, moving debt from one credit card account to another one with lower or no interest can save you money. However, if you don’t pay off the balance before the promotional period ends, it could actually cost you more in the long run. Here are some questions to ask yourself before initiating a balance transfer.

What’s the interest rate?

Check your credit card statement to see the interest rate that you’re currently paying. Compare this rate to other deals available to you. If you can lower the rate, or even eliminate it for a period, you could save some money.

What are the balance transfer limits?

If you find a card with a favorable rate, the next thing to determine is how much can you transfer. Don’t forget to consider fees. A low transfer limit might not be worthwhile for your situation once you add in the fees.

What fees will you pay?

Many balance transfers incur a fee, typically between 3-4% of the amount transferred.

How long does low or 0% interest last?

When considering a balance transfer, pay attention to the length of the promotional period and what happens if you don’t pay the balance by the time the promo ends. The interest rate after the promotion expires may be higher than what you’re currently paying.

How much room is in your budget for debt reduction?

Let’s look at an example of what it takes to pay down a balance transfer. If you’re like the average credit card holder with a balance of about $5,200 and you want to take advantage of 0% interest for 12 months, you will need to contribute $433.33 each month to pay off the entire amount within one year timeline. Ask yourself if this is doable based on your income and other expenses.

Be realistic with your budget and how much cash you have available to pay down debt.

What’s your plan for paying off the debt?

Moving debt from one card to another does not change the fact that you have debt. How will you pay down your debt? Reduced spending? Earning more? Selling something? Make sure you have a plan for reaching your financial goals.

Many folks access 0% interest balance transfers when they open a new account. Once the balance is moved from the first card, it can be tempting to run up a balance again. Carrying debt on two cards will be even more difficult to pay off. Have a budget in place and stick to it.

Consider a Consumers credit card

Check out one of our multiple Consumers credit card options that offer cash back, ID theft protection, and balance transfers and more. Plus, there are no annual fees.