Seven Steps to Pursue Financial Independence

Understanding Balance Transfers

Transferring a credit card or loan balance to a new credit card with a lower APR is a helpful step toward paying down your debt, but be sure to understand the benefits and pitfalls, as well as familiarize yourself with the rules of each financial institution first.

What Is a Credit Card Balance Transfer?

A balance transfer is a way to move money owed on one credit card or loan (debt) to another credit card for the purpose of saving money on interest. If you don't pay off your credit card every month, you're going to have to pay interest on the amount owed. By transferring the balance it to another card with a lower interest rate or special “no interest for X months” terms, you may (or might) save money.

The Benefits of a Balance Transfer

First and foremost, balance transfers allow you to pay less interest on your debt . Other benefits include:

  • Debt consolidation. Balance transfers often allow you combine the money owed on multiple cards and loans into one. This may make it easier to make timely payments and reduce fees.
  • Lower rates. If you are considering a balance transfer, you should only consider those with a lower rate than what you currently have. 
  • 0% APR. Some balance transfer credit cards come with a 0% APR for a limited time. This means you can temporarily not pay interest while you pay down your credit card debt.

The Pitfalls of a Balance Transfer

Balance transfers are a great way to reduce the amount of interest you pay on your debt   Be sure you've familiarized yourself with the terms offered by the new card you're looking at, and be mindful of the following possible pitfalls:
  • Introductory low interest rates don't last forever. If you don't think you can pay off the debt before that great rate expires, maybe it's not a good deal for you to transfer your debt to that card. 
  • Regular interest rates might be higher than what you're paying now. Say you owe $8,000 on your current credit card. If the interest rate is less than the card you are looking to transfer to, and you aren't sure you can pay off the balance before the low intro rate expires, maybe it's not the right card.
  • You'll still have to keep up your monthly payments. If you struggle to make monthly payments with your current credit card, you likely will find the balance transfer payments hard, too. Credit card companies are often strict with customers who use their credit cards for balance transfers. Making a late payment or even missing a payment could be costly.

What to Look For in Balance Transfer Offers

It's important to do your research before accepting a balance transfer offer. Many cards accept balance transfers, but not all of them will save you money. What to look for:

  • The balance transfer fee. Many cards charge 1, 3 or even 5% of the amount you plan to transfer. For example, if you wanted to transfer $10,000, a 3% fee would cost you $300.
  • The interest rate on transferred balances. Many credit cards offer and accept balance transfers with a low introductory rate, often 0%.  
  • Length of promotion. Is the lower rate good for 6 months? 12?  Make sure you understand when the interest rate will increase and when your promotion ends.
  • Annual fee. Some cards have them. Make sure to ask.

Above all, be sure to do the math. A 3% monthly APR with a 0% balance transfer fee may be better than 0% APR for 12 months but with a 5% transfer fee. Throw in an annual fee and the calculations get even more complicated. It just depends on how much you owe, what you can afford to pay every month, and how long you think it'll take to pay your way down to a $0 balance.

BECU's Balance Transfer Benefits

At BECU, both our Visa  and Cash Back Visa  cards have low APR rates, no annual fees, and balance transfers with an introductory 0% interest  for 12 months*, after which your interest rate will be from 8.90% to 22.90%. We stand by our commitment to rewarding good financial habits. If your credit score improves, not only might you see improvements to your FICO score, but you may qualify for lower credit card rates via our Loan Reprice program.

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Credit Card programs, services, rates, terms and conditions are subject to change without notice.  Contact BECU for the most current information.

*0% Introductory Annual Percentage Rate (APR) on purchases for twelve (12) months from date of account opening, and 0% introductory APR on balance transfers for twelve (12) months when completed within ninety (90) days of account opening. After that your APR will be from 8.90% to 22.90%, based on your credit worthiness and product selection. This APR will vary with the market based with Prime Rate. Please refer to the Credit and Security Agreement for the terms and conditions, fees, and charges, and other information regarding your credit card account. 

SPECIAL NOTICE TO MEMBERS WHO PAY THEIR ENTIRE BALANCE IN FULL EACH MONTH: IF YOU ALWAYS PAY YOUR BALANCE IN FULL EACH MONTH, YOU DO NO T PAY INTEREST ON YOUR PURCHASES. THIS IS CALLED A GRACE PERIOD. PLEASE NO TE THAT IF YOU TAKE THIS OFFER, YOU WILL LOSE YOUR GRACE PERIOD. IF YOU TRANSFER A BALANCE TO THIS ACCOUNT, YOU WILL BEGIN PAYING INTEREST ON ALL NEW PURCHASES (WHICH INCLUDES RECURRING AUTOMATIC PAYMENTS) CHARGED TO THE ACCOUNT, EVEN IF YOU PAY YOUR PURCHASE BALANCE IN FULL EACH MONTH. TO AVOID PAYING INTEREST ON YOUR PURCHASES, YOU MUST PAY BOTH YOUR TRANSFERRED BALANCE AND YOUR PURCHASE BALANCE IN FULL.