The holidays are over, but the credit card debt remains for many. In fact, four in 10 U.S. adults report willing to go into debt – or deeper debt – for holiday shopping.1 Your balance payoff strategy will have to include more than a crackling fire and hot chocolate this winter. Consolidate all your high-interest credit card debt to a low-rate card, a process known as a balance transfer, and reap the benefits in the new year.
5 reasons to tackle holiday debt with a balance transfer
1. Pay less in interest
The credit card industry is competitive. From starting bonuses to special perks, everyone is trying to attract borrowers. The best incentive to look for in a new card is a low annual percentage rate (APR). This number is what you pay in interest if you carry over a balance month to month. While the average credit card APR is around 20%, store credit cards weigh in even higher at around 24%.2 This can add up overtime if you don’t pay your balance in full each month, which is why it’s beneficial to transfer your debt to a low-rate card.
Often, borrowers are offered a promotional APR for a balance transfer. Even if it’s temporary, it makes more sense to enjoy a 0% introductory APR for 12 months than to stick with a high-rate credit card and risk accruing interest. Outside of promotional APRs, you can find credit cards that have a significantly lower APR than the industry average, meaning you can enjoy lower interest payments.
- Tip: Credit unions are not-for-profit entities that exist to benefit their members. Here at General Electric Credit Union (GECU), you can expect better terms and lower rates than what’s offered at big banks. Experience the credit union difference and transfer your balance to a low-rate card today.
2. Save time
It’s easy to miss a payment if you carry a balance on multiple cards. You may forget to check the balance on one of them and get dinged with a late payment fee. A balance transfer simplifies the repayment process by housing your total balance under one card. You’ll only have to remember the login information for one account, giving you a better chance of staying on top of payments.
3. Boost your credit score
Credit card debt can seriously affect your credit score. While one late payment isn’t the end of the world, a track record of carrying over a balance month to month or missed payments alters your creditworthiness in the eyes of lenders.
As high-interest debt snowballs, it will also affect your debt-to-income ratio (DTI). Lenders use this ratio as a risk assessment to determine how likely you are to pay them back. A high DTI may indicate that you are too dependent on credit. By consolidating your credit card debt onto a low-rate card, you may end up racking up less in interest payments. This is beneficial to your credit score because paying off debt is much more manageable when it isn’t left to grow exponentially at an exorbitant rate.
How Do I Transfer My Credit Card Debt to a GECU Card?
Your first step is to review our full suite of credit cards to find the right one for you. Whether you want travel perks or unlimited cash back, our cards are the gift that keep on giving. If you need some guidance, one of our Credit Union team members is happy to point you in the right direction. Once you’re happy with your selection, simply apply for a balance transfer online. Yep – saving money and paying down debt is that easy.