A Balance Transfer Card Could Help You Pay Off Debt Faster
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Say hello to 2019! We’re here to help you easily make smart money moves this year so you can save more and spend more time doing the things you love.
The holidays can be tough on your wallet. Between buying gifts, paying for expensive flights and dining out more than usual, you might be carrying some credit card debt.
But don’t be discouraged. 2019 offers a fresh beginning and a chance to check off your resolution to pay off that debt, one baby step at a time. One way to start is by looking into a balance transfer credit card to save on interest.
Regardless of how much you might owe — the average U.S. household with credit card debt has an estimated $6,929 in revolving balances, according to a recent NerdWallet study — getting rid of your debt can pave the way for other potential goals, such as buying a home or attending that destination wedding.
» MORE: Tackle these money goals in 2019
Why transferring your balance can help
You might be wondering, “How will opening another credit card help me?”
Although it isn’t a silver bullet, a balance transfer card can be an effective tool to manage your credit card debt.
Here’s an example of how it works: Let’s say you’re carrying $3,000 in debt on one card, $1,500 on another and $1,000 on a third — and paying interest on all three cards. By transferring the combined balance of $5,500 to a new card with a 0% annual percentage rate for 18 months, you’ll now only manage one payment and won't have to pay interest for a year and a half.
This means you can focus on paying off the original debt.
A few things to consider
Before you apply for a balance transfer card, take the following into account:
Look for a long 0% introductory APR period on balance transfers. This means you’ll have more time to pay down the debt you move to the card interest-free. The cards we recommend tend to have a 0% intro APR balance transfer period of 18 to 21 months. (Note that these cards don't necessarily offer 0% intro APR on purchases, so before making new charges, check your card's terms.)
You’ll likely need good credit to qualify. The best balance transfer cards are generally available only to people with good or excellent credit, which roughly translates to a score of 690 or above. If you’re not there yet, consider taking out a personal loan instead, and work on building your credit in the meantime.
Weigh the transfer fee. Most balance transfer cards will charge you a fee of 3% to 5% of the amount you’re transferring. Transferring $5,500 with a transfer fee of 3% would cost you $165, but that could still be significantly lower than the interest you'd owe if you didn't transfer.
Think about your credit. If you make your monthly payment on time, a balance transfer card won’t hurt your credit score. (Credit card applications can trigger a hard pull on your credit report, which does lead to a dip in your score that is usually temporary.)
» MORE: 3 steps to pay off debt
Watch our video to learn more about balance transfer:
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