Is a balance transfer right for me?  

With a new year waiting just over the horizon, it’s not too soon to start thinking about your goals for 2017.

Most people will make at least one financial resolution this year. More than one in four Americans will vow to pay down their debts, while around 10 percent will aim to improve their credit score.

Paying off some of your credit card debt can help free up your money so you can start working toward other important goals, like building your savings or buying a home. Many U.S. households carry $10,000 or more in debt and pay credit card interest rates ranging from 15 percent to 20 percent. For the average consumer, that can amount to more than $2,600 in credit card interest each year.

If you’d like to reclaim some of this money but aren’t sure how to find room in your budget to pay off a credit card, a balance transfer might be the solution you’re looking for. Shifting your debt from a high-interest credit card to one with a low introductory rate can temporarily reduce the amount of interest you pay, allowing you to use the extra money to pay down your balance.

Oregon Community Credit Union cards, for example, offer 0 percent Annual Percentage Rate (APR) on balance transfers for up to a year.* Although you don’t earn reward points on balance transfers, you do get a an opportunity to help pay down your debt and potentially free up some of your income for other priorities.

Each year, U.S. consumers transfer up to $40 billion from one credit card to another—but it’s not the right strategy for everyone. Used responsibly, balance transfers can give you a head start on your credit card repayment plan. If misused, they can allow you to dig yourself deeper into debt. To determine whether a balance transfer is right for you, consider the following questions:

What shape is your credit in?

Balance transfer rates are almost always based on your creditworthiness. The better your credit score, the more options you’ll have.

Although some 85 percent of credit cards allow balance transfers, fewer than half offer low introductory rates. These can range from 0 percent to more than 10 percent and can last anywhere from six months to a year. Some cards charge a fee on balance transfers, usually around 3 percent. Once the introductory period is over, the interest rate can stay as low as 7.99 percent or climb as high as 26.99 percent depending on your credit history.

If you’re looking to improve your credit score, a balance transfer can help by increasing your available credit—as long as you don’t close your old card or max it out again with new charges. But keep in mind that overusing this strategy can hurt your credit in the long run. Too many balance transfers may make it appear to creditors that you’re avoiding paying your bills by shuffling your debt from one card to another.

When do you plan on paying off your debt?

Once you’re approved for a balance transfer credit card, the countdown on your introductory rate begins. The impact you make on your debt will depend on how quickly you can make the transfer and pay down your balance. A few things to consider:

• Length of introductory period. If your goal is to pay the card off before the promotional interest rate ends, make sure this is feasible by dividing your total balance by the number of months in your introductory period. This will tell you how much you’ll need to pay each month.
• Post-introductory rate. Find out how much your interest rate will be once the promotional offer ends. If it’s more than what you’re paying now, the balance transfer may not be worthwhile unless you can pay off most of the balance during the introductory period.
• Overall interest savings. Even if you can’t pay off your entire balance, a transfer may still help lower your overall credit card payment. Determine how much you’ll be able to pay off while your rate is low, then calculate how much you’ll pay on the remaining balance once the post-introductory rate kicks in. If it’s less than what you’re paying now, it may be worth it.

Can you avoid the temptation of using both cards?

When paying down your debt load, a balance transfer only works if you’re careful not to keep charging. With two cards instead of just one, the temptation to use them can be powerful. Those who fall into this trap can find themselves spiraling deeper into debt.

If you don’t think you’ll be able to resist, it’s best to avoid opening another credit card. But if you’re disciplined enough to put the cards away and focus on paying down your balance, a balance transfer can be an effective strategy.

Ready to get started?

If you decide to go for a balance transfer, you can start by applying for an OCCU credit card. As a credit union, we’re able to offer some of the lowest interest rates and best terms available, including:

• NICE card. Our NICE® Platinum Visa® Credit Card offers the lowest rates, starting at 9.24 percent APR to 19.24% APR depending on your credit—plus a 0 percent APR introductory rate on balance transfers for 12 months*.
• Duck or Beaver card. Our Duck and Beaver Visa® credit cards range from 10.24 percent APR to 20.24 percent APR depending on your credit and includes a 0 percent introductory rate on balance transfers for six months*.

With OCCU as your financial partner, you’ll have a variety of debt management tools at your fingertips. Contact us today to learn more about our credit cards and the many other ways we can help you achieve your 2017 financial goals.

*Nice card: purchase APR: 9.24% to 19.24%, based on creditworthiness and will vary with the market based on Prime rate. Balance Transfer APR: 0.00% introductory APR for 12 months from account opening date for balance transfers completed within 60 days from the account opening date. After that, Balance Transfer APR will be 9.24% to 19.24%, based on creditworthiness and will vary with the market based on Prime rate. Cash Advance APR will be 14.24% to 24.24%, based on creditworthiness and will vary with the market based on Prime rate. Balance Transfer Fee / Cash Advance Fee, $10.00 or 3.00% of the amount of each balance transfer or cash advance, whichever is greater. Foreign Transaction Fee, None. Annual Fee, None.

Duck/Beaver cards: purchase APR: 10.24% to 20.24%, based on creditworthiness and will vary with the market based on Prime rate. Balance Transfer APR: 0.00% introductory APR for 6 months from account opening date for balance transfers completed within 60 days from the account opening date.  After that, Balance Transfer APR will be 10.24% to 20.24%, based on creditworthiness and will vary with the market based on Prime rate.  Cash Advance APR will be 15.24% to 25.24%, based on creditworthiness and will vary with the market based on Prime rate. Balance Transfer Fee / Cash Advance Fee, $10.00 or 3.00% of the amount of each balance transfer or cash advance, whichever is greater. Foreign Transaction Fee, None. Annual Fee, None. Cash back via statement credit.

Introductory terms are for new cardholders only. If you have received the benefit of a card promotion on an OCCU credit card product in the past 24 months you are not eligible for this promotion. We will not process any balance transfer request to pay off or pay down any account or loan issued by Oregon Community Credit Union, OCCU Card Services, LLC or our affiliates. Membership and eligibility restrictions apply.

Rates and terms effective as of 10.12.16, when this content created. Contact OCCU Card Services at 800.365.1111 for current rates and terms.