Previous | IRS extends federal tax payment deadline to May 17 Next | Checking your credit is free, for now — here’s why you should take advantage
April 08, 2021 / Cynthia Marconi
What is a balance transfer — and when does it make sense?

What is a balance transfer — and when does it make sense?

A balance transfer is a credit card transaction where you move your credit card balance from one card to another — typically a new one with a lower interest rate.

Moving high-interest debt to a credit card with 0% APR can save you a lot of cash.Picture of a credit card

Usually, there is a balance transfer fee of around 3% associated with the move, but some credit card companies waive the fee.

How does it work?

Basically, when you transfer a balance to a credit card, that new card company pays off what you owe to your original lender. This now shifts your debt to your new card’s issuer.

It’s important to keep in mind that while the interest rate will be lower, you will still be responsible for paying the minimum amount required each month.

Potential pitfalls

Usually, low or 0% APR only lasts for a promotional period. So, it’s important to know exactly how long that period lasts. Otherwise, you could find yourself on the hook for unexpected interest charges.

And adding a large amount to a card will have an impact on your credit utilization ratio, which is a crucial component to your credit score.

Bottom line

A balance transfer is an excellent tool to get out of debt faster and reduce the amount of money you spend on interest. Just read the fine print before you sign on the dotted line.

Cynthia Marconi serves as vice president, treasury manager at F&M Trust

Recent Articles
Post Covid Investing: Time for a Deeper Look
Post Covid Investing: Time for a Deeper Look

Post Covid Investing: Time for a Deeper Look

May 03, 2021 / Scott Ehrig

First quarter 2021 economic review and outlook
First quarter 2021 economic review and outlook

First quarter 2021 economic review and outlook

April 26, 2021 / Warren Hurt

Beware of unemployment fraud — even if you’re employed
Beware of unemployment fraud — even if you’re employed

Beware of unemployment fraud — even if you’re employed

April 22, 2021 / Ray Wills

Checking your credit is free, for now — here’s why you should take advantage
Checking your credit is free, for now — here’s why you should take advantage

Checking your credit is free, for now — here’s why you should take advantage

April 15, 2021 / Ray Wills

IRS extends federal tax payment deadline to May 17
IRS extends federal tax payment deadline to May 17

IRS extends federal tax payment deadline to May 17

April 02, 2021 / Shelby White

How to spot investment coaching scams
How to spot investment coaching scams

How to spot investment coaching scams

March 17, 2021 / Ray Wills

Individual investor muscle
Individual investor muscle

Individual investor muscle

March 08, 2021 / The Merrill Anderson Company

Investor alert: Robinhood app hit with hefty fine from federal regulators
Investor alert: Robinhood app hit with hefty fine from federal regulators

Investor alert: Robinhood app hit with hefty fine from federal regulators

February 23, 2021 / Shelby White

Gift values during a pandemic
Gift values during a pandemic

Gift values during a pandemic

February 16, 2021 / The Merrill Anderson Company

Join our e-newsletter

Sign up for our e-newsletter to get new content each month.

NOTICE: YOU ARE LEAVING F&M TRUST!

You are now leaving the F&M Trust website. Links to third-party sites are provided for your convenience. Such sites are not within our control and may not follow the same privacy, security or accessibility standards as ours. F&M Trust neither endorses nor guarantees offerings of the third-party providers, nor is F&M Trust responsible for the security, content or availability of third-party sites, their partners or advertisers.