- April 14, 2022
- Posted by General Electric Credit Union
- 3 read
Top 3 Balance Transfer Strategies You Should Use
A balance transfer is a fantastic opportunity for cardholders to secure a better annual percentage rate (APR) while they pay down debt. It works by taking all your high-interest debt and consolidating it onto one low-rate credit card. But before you take the plunge and apply online, it’s best to think through your choices strategically. Below are a few tips to utilize as you shop for the best deal.
3 tips if you want to apply for a balance transfer
1. Choose a low-fee option
You will likely have to pay a one-time fee for a balance transfer that’s based on a percentage of the debt you’re transferring over. This can amount to a couple hundred dollars depending on your balance. A balance transfer is only advantageous if it saves you money in the long run, so look for a financial institution offering low fees. This will ensure you pay less upfront and have more money to commit to debt payoff in the future.
Did you know?: General Electric Credit Union (GECU) has a competitive balance transfer fee because we design our products and services with your best interests in mind. Learn more about the perk-rich GECU credit cards you can transfer your balance to. Once you find the perfect match, apply for it conveniently online.
2. Secure a limit that makes sense
Lenders use a value called the credit utilization rate to measure how much available credit you’re using. For example, someone with $1,000 in credit card debt and a combined credit limit of $5,000 would have a credit utilization rate of 20%. Anything over 30% indicates you’re too dependent on credit, so it’s important to keep tabs on your spending.
What’s this have to do with balance transfers? Well, a balance transfer allows you to consolidate your debts onto a single card with a new credit limit. For this reason, it’s important to choose a card with a limit you won’t max out immediately. Using the example above, it wouldn’t make sense to transfer $1,000 in debt to a card with a credit limit of $2,000. This would make your single card utilization rate skyrocket to 50%. However, a credit card with a limit of $10,000 would keep your rate well below 30%. Plus, you’ll enjoy a better rate as you pay down debt.
3. Think long-term
While a promotional annual percentage rate (APR) is enticing, it won’t last. That’s why it’s wise to apply for a credit card with a competitive rate even after the promotional period ends. If you don’t, you may find yourself in a similar situation as you were before, racking up high-interest debt.
Wondering how to do a credit card balance transfer? Apply online for a GECU credit card in minutes. Opening an account makes you a member of the Best Credit Union in Cincinnati. We offer a range of rewards-based and cash back credit cards with no annual fee.1 Get in touch with a team member by calling 513.243.4328 or visiting your local branch. We’re happy to match you with the perfect credit card.