PGCFCU Blog

Under the right circumstances, moving high interest rate debt to a lower interest rate credit card makes sense. Depending on your financial goals, you might be looking to save on interest charges, lower your monthly debt payments, or both. But before you take on new debt to pay off an old one, there are a few things to remember to ensure this money move provides the payoff you expect.

A credit card balance transfer doesn’t erase the old debt. Instead, it moves the debt to a different credit card.

Here are common mistakes to avoid when dealing with balance transfer credit cards.

Mistake #1: Failing to define financial priorities.

A balance transfer is best completed as part of a broader financial strategy. When you examine your income and expenses, determine whether the priority is to reduce your debt payments or pay them off quickly. Reduced debt payments can bring relief to a tight budget. Paying off credit card debt faster allows you to save money on interest charges.

Identify how completing a balance transfer fits in with your financial priorities. The answer will help you create a balance transfer and debt repayment plan that works for your finances.  

Mistake #2: Ignoring the payment due date.

When you’re in the process of completing a credit card balance transfer, plan on paying your regular minimum monthly payment until you receive confirmation that the transfer is complete. Balance transfers take at least a few days, sometimes a few weeks, to process. You’re still responsible for payments to your original credit card until the balance is paid in full.

Missing a payment can mean a late fee and a negative mark on your credit report. Confirm the balance transfer is complete by staying in contact with each credit card issuer.

Mistake #3: Using the old credit card for new purchases.

Wiping the balance of your current high-interest card feels like a fresh start. You’ve decided to keep the account open to avoid a credit score dip. But, the card is sitting there with a zero balance and you have a long list of delayed purchases that are calling your name, e.g., new furniture, an upgraded mobile device, etc. Resist the urge to use your old credit card for new purchases. Remember why you transferred your balance in the first place.

Mistake #4: Confusing or failing to understand balance transfer details.

Each financial institution has different requirements and expectations with balance transfers. They may have transfer minimums or limits, only apply the new low-interest rate to the transferred amount, or increase the interest rate after the promotional period ends. Read the details of the balance transfer offer and ask questions before you submit the credit application.

Mistake #5: Forgetting to calculate your potential savings.

Before you decide on a balance transfer offer, figure your potential savings. Use Prince George’s Community Federal Credit Union’s Debt Relief Calculator to see how much you can save based on your current balance and interest rate. A lower interest rate credit card may only be the beginning of the savings available with a balance transfer.

If you transfer your balance to a rewards credit card, like Visa Elite Rewards®, you can earn points for spending. Redeem reward points for gift cards, travel, merchandise, and cash back. Paying off debt doesn’t mean you can never use another credit card. Responsible credit use includes making on-time payments and keeping account balances low.

Join other Prince George’s Community Federal Credit Union members who’ve saved money by transferring their high interest rate debt to our Visa Elite Rewards® or Visa Platinum® credit cards*. With zero balance transfer fees and a 2.99% APR on all balance transfers for six months from the date of card approval, it couldn’t be easier to save.

Complete a credit card balance transfer form today!

*APR= Annual Percentage Rate. Introductory Balance Transfer APR is 2.99% for 6 months from date of account opening; then the standard Balance Transfer APR applies. Standard Balance Transfer APR: 8.99% to 17.99%, based on your creditworthiness. The Promotional Rate is not available on Visa Secured credit cards. This offer does not apply to balances transferred from Prince George’s Community Federal Credit Union loans. You may transfer up to your available credit limit. Please continue to make minimum payments on your other credit card(s) until the balance has been transferred. The other institution(s) will refund all overpayments. Payment of the account(s) authorized by you may not satisfy any outstanding balance(s) on the designated account(s). Prince George’s Community Federal Credit Union is not responsible for any outstanding balance(s) or additional charges in regard to such accounts, or for any changes resulting in any delay in the payment or transfer of balances. The total amount(s) transferred will be treated as a cash advance; finance charges will be applied from the day the balance(s) are transferred to your Prince George’s Community Federal Credit Union credit card account. Prince George’s Community Federal Credit Union reserves the right to refuse multiple transfers from the same credit card. Certain restrictions apply. For more information and conditions, please contact us.