A balance transfer — moving your debt from one credit card to another one, usually with lower interest fees — can be a saving grace for many Americans. But like every aspect of having and handling credit cards, whether it’s right or not for you depends on your financial situation, as well as on being meticulous and disciplined.

                By                    Yaёl Bizouati-Kennedy

Here’s what you need to know about balance transfers to decide if it’s the right move for your debt.

How Does It Work?

A balance transfer is exactly this: moving your credit card balance to a new card with a very low interest rate. Yes, the amount you owe remains the same, but you will save — for a limited time — on interest payments. In turn, this could help you pay your balance faster and plan better. While many cards that come with low intro rates charge a fee to transfer a balance, there are a few cards that offer low rates and low fees.

For example, Navy Federal Credit Union’s Platinum Credit Card comes with a low intro APR that extends for 12 months on balance transfers made in the first 60 days. This makes the card an ideal choice for transferring a balance effectively — you have a year to pay off your balance at a greatly reduced interest rate.

When Is a Good Time To Consider Doing a Balance Transfer?

Balance transfer cards may be a great option for someone who wants to pay off a large amount of debt quickly and save money on interest payments while doing it. Consumers should think about a balance transfer if they meet several criteria.

First, if you are paying monthly interest charges and cannot pay your credit card down in full each month, it might be a good option. Then, consider it if your credit score is north of 700, and your overall credit card debt is less than $5,000, as balance transfer cards generally limit your transfer amount based on your available credit line.

A balance transfer could also be a good option if you make an expensive purchase with a credit card and only make the minimum payments because you could be paying it off for years.

Are There Any Drawbacks?

A balance transfer can save you money by helping consolidate your debt and avoiding interest fees for a certain amount of time. However, it’s important to note that there’s a risk of being unable to pay down the debt in the introductory period.

The introductory period typically lasts about 12 months, and you should aim to pay off your balance within that timeframe. Once that period ends, you’ll be back to paying the card’s regular APR on the remaining balance.

This is why it’s important to look beyond the promotional intro offer and consider a credit card’s regular rates and fees. It’s also another reason why Navy Federal Credit Union’s Platinum Credit Card stands out. After the low intro APR offer runs out, you still get a low variable APR.

If you choose the right card and remain disciplined, a balance transfer can play an important role in improving your financial situation.

  • 9 Bills You Should Never Put on Autopay10 Ways To Build Wealth Fast22 Side Gigs That Can Make You Richer Than a Full-Time Job6 Top Tips for How To Turn $1,000 Into $10,000