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How Can a Balance Transfer Help You Pay Off Debt?


Authored By: Honor Credit Union on 1/10/2018

Two escalators in the mall with the wording escalate your savings and pay off debt!

How Can a Balance Transfer Help You Pay Off Debt?

Picture this… You're at your favorite store and you’re offered a 45 percent discount off the entire purchase on the spot if you just sign up for their credit card! It's a hard deal to pass up, right? With deals like that, it's easy to end up with several different credit cards, payments, and interest rates that can increase drastically after an introductory period.

Wouldn't it be nice to consolidate all your cards into one single monthly payment? Well you're in luck, because that's exactly what a balance transfer is for!

Take a look at this information to help you determine if a balance transfer is right for you:

What is a balance transfer?

A balance transfer allows you to move debt from one credit card to another with an introductory interest rate for a period of usually six months to one year. During the introductory period, your interest rate is either zero percent or a very low percentage, to give you a chance to make all your payments straight to the principal amount. If you're looking to pay off your debt faster without accruing all that pesky interest, a balance transfer would be a great place to start.

CHEERS TO ZERO: Take control of your credit card debt by transferring your balance to an Honor card with 0% interest for 12 months. To learn more, click here.

Consolidate debt

If you have multiple credit cards with high interest rates, a balance transfer can offer you some relief. Instead of making several payments on different days of the month, you'll only have one payment schedule to keep track of. Many balance transfers will offer you a low, or even 0%, interest rate during the introductory period, so while are you are paying directly to the principal amount it’s a great idea to stash away a little extra cash in a savings account for a rainy day. Just think of that new savings as the interest you would have been paying on your other cards.

CLICK HERE for more tips on how to save money in the new year!

Does this mean I should close my old credit cards?

Not necessarily. In fact, we would recommend you don’t. Even though you will be transferring the entire balance off your old cards, it's best to leave them active. Closing out credit cards can bring down your credit score. About 15 percent of your credit score is based on the age of your accounts, meaning the longer you have your accounts, the better your score is. By closing a line of credit, you are shortening your average account age. Unless you have a card with an annual fee, it's best to leave the cards open. 

To learn how you can save more dough with Honor’s current CD Special Click here!

Be sure to follow Honor Credit Union on Twitter @HonorCU, on Facebook @HonorCreditUnion and on Instagram @honorcreditunion!

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If you are using a screen reader or other auxiliary aid and are having problems using this website, please call 800.442.2800 for assistance. All products and services available on this website are available at all Honor Credit Union full-service locations.