If you live in Washington D.C., you know there’s always something to do — and something to spend money on. Whether you went on a shopping spree at Tysons Corner Mall or Union Station, or went to an event at the Verizon Center, you might have broken your budget by racking up some credit card debt.
But have no fear: Transferring credit card balances is a good way to consolidate credit card debt and save money on interest. You might have multiple balances, each with varying interest rates and minimum payments. By transferring your balances to one credit card, you can spend less money on interest, only manage one monthly payment and even buy yourself more time to pay off your debt.
But before you rush off and start transferring all your credit card balances, there are some things to consider. Here are seven things to keep in mind as you can plan a strategic balance transfer that will help you manage your payments easily from a single credit card, reduce the amount of interest you pay and increase your credit score.
Choose a Low-Rate Credit Card
A common way to manage debt is to transfer higher credit card balances to a low-rate card so that interest doesn’t exponentially increase the amount owed. The lower the interest rate, the less growth your balance will have. You’ll not only have a more manageable payment, you’ll also buy yourself more time to pay it off.
Find a No-Fee Balance Transfer Offer
Transferring balances to a single card makes paying off debt simpler and should ideally save you money on interest. But some cards have predatory fees for balance transfers. So, when consolidating your credit card payments, choose a credit card with no balance transfer fee. For example, DVA Federal Credit Union offers a Visa credit card with no fee for balance transfers to help you consolidate your debt and pay it off more quickly — all while saving you money on interest.
Set Up Automatic Payments
The whole point of transferring your balances is to simplify your payments and reduce the amount you spend on interest. It’s important to stay organized with your payments, otherwise you could end up paying late payment fees, higher minimum balances and even more interest. The best thing to do is to set up automatic payments, so you never miss a due date. If that isn’t something you’re comfortable with, make sure to at least mark your calendar three to five days before your bill is due so you don’t accidentally miss a payment.
Monitor Your Credit Score
Some institutions offer 0% APR or close to 0% APR credit cards for members meeting a minimum FICO score requirement. Consolidating your balances and staying on top of your payments can help you eliminate debt faster and help you increase your credit score. Plus, once you’ve qualified for a 0% APR card, you can transfer your balances to the new card and pay no interest.
Understand the Fine Print
Some cards will offer handsome introductory offers, like 0% introductory APR or free balance transfers. But the deals always come with an expiration date. Make sure you know exactly how long the offer lasts so you aren’t caught by surprise when you receive a bill with a higher APR or a balance transfer fee.
Explore Other Incentives
Free balance transfers and 0% APR seems attractive, but the amount you save with those offers might pale in comparison to other offers. For example, some credit cards come with a hefty cash bonus upon signing or a higher cash back percentage on purchases. On the other hand, your credit card might come with a high monthly or annual fee that totally negates any positive benefits. Consider how the cards features will benefit your personal financial situation, then go from there to find what works best for you.
Get Your Card Through a Credit Union
The smartest way to pay off your credit card balances is to shop around and find a great deal. Overall ,credit unions have the best rates to help you pay less and get out of debt faster.
DVA Federal Credit Union is a GOBankingRates client.