0% APR: Should You Transfer Your Balance to a New Credit Card?

The start of a new year means tempting special offers to open a new credit card, including 0% APR for an introductory period like with HUECU's credit card options. One great way to take advantage of these offers is by transferring your credit card balance to a new card. The ultimate benefit of transferring your balance is simple: it could save you money.

How do you know if a balance transfer is the right move for you; and moreover, what should you look for in a new balance transfer credit card? Read on for a quick look at what to consider if you’re thinking about opening a new card and transferring your balance.

What Is a Balance Transfer?                                                 

A balance transfer means moving the money you owe from one credit card to a different card. The reason for doing this is that a new card may offer a lower interest rate, so you won’t continue to accrue as much debt on your balance. Imagine you owe $3,000 on a credit card with a 30% interest rate. That would mean that in addition to the $3,000 owed, you’d also be paying $900 in interest over 12 months. But what if you had a 0% interest rate for that year instead? If you find the right balance transfer credit card, you could save yourself a hefty chunk of money – but there are still a few key questions to ask.

4 Questions to Ask When Choosing a Balance Transfer Card

1. What is the introductory rate and how long does it apply? Many balance transfer cards advertise a 0% introductory interest rate, which sounds great – but if the rate only lasts for one or two months, you might not be getting the full benefit of a balance transfer.
2. What’s the APR after the intro period? Again, be sure you’re still getting a good deal after the introductory rate expires. The last thing you want is to end up with a higher APR than before, especially if your balance isn’t fully paid off by the end of the introductory period.
3. How much is the balance transfer fee? You’ll likely need to pay a fee to transfer your balance, which is usually a percentage of the total balance. Be sure to check the fine print and calculate both your balance transfer fee and your APR to decide what balance transfer card is the best option.
4. What’s the APR on new purchases? If you’re planning to make new purchases on the card, find out if the advertised interest rate for balance transfers also applies to any new balances accrued; and again, ask questions about what your interest rate will look like after the introductory period.

A Trusted Choice: The HUECU Platinum Rewards Card

As a not-for-profit credit union that exists to serve members rather than maximize corporate profits, HUECU offers consumer friendly credit cards with no gimmicks or hidden fees. The HUECU Platinum Rewards Card is a good example of a trusted choice for balance transfers.

Balance transfers to the HUECU Platinum Rewards Card get 0% APR for a full 12 months², which means more time to pay off your debt without accruing additional interest. Meanwhile, the 2% balance transfer fee is low compared to similar APR options on the market. Importantly, even after the 0% intro rate, the HUECU Platinum Rewards Card offers variable APR rates of 11.74% to 17.99%¹, depending on credit worthiness – so if you haven’t paid off your current balance after a year, or if you start making new purchases and accruing a new balance, your interest rate won’t suddenly go sky-high, and you can continue to enjoy good terms and conditions on your card.

Tips to Pay Off Your Balance

The best way to take advantage of a low introductory APR is to transfer your balance and pay it off within the introductory period. That way, you can significantly lower the total amount of interest you’re responsible for paying. Here are a few tips to help you pay off your balance after transferring to a new credit card:

1. Set up auto payments: Ask your credit union or bank about setting up automated payments for a set amount every month, so that you don’t miss a payment.
2. Calculate your ideal monthly payment: Work out how much you would need to pay every month to get your balance down to zero by the end of the intro APR period. If you’re getting a 0% rate for 12 months and have $6,000 to pay off, you’d want to aim for payments of $500 per month.
3. Beware of new balances: It can be tough to pay off credit card debt, and bringing a new balance into the equation will only make things harder. Aim to limit credit card purchases in the new year or pay these off in full every month to keep you on track toward your financial goals.

1. The Annual Percentage Rate will be calculated by adding some margin (dependent on credit worthiness) plus the prime rate as published in the Wall Street Journal on the last Thursday of every month.
2. First year consists of the first 12 billing cycles.

Looking for more tips? Learn 5 Ways to Capitalize on Your Credit Cards.