There is no magic wand to poof away debt. But you can save money and pay what you owe faster by managing your credit card balances thoughtfully. Start with a close look at your finances, and follow our tips to power down your balances.
- Add up all your unsecured debt - including credit card balances, medical debt, and personal loans. Can you see yourself paying it off in five years? If not, transferring your debt may not be enough to cut costs.
- What is your interest rate on each balance? Could you consolidate to one card with a lower rate? Consult one of our member service representatives for a free credit score review so you are sure you’ve got the best deal.
- Be clear on how you got into debt. If overspending is an issue, address it before consolidating. You might be tempted to run your balance up again, and end up in even more debt.
Once you’ve established that your debt is manageable and you’re committed to paying it off, you’re ready to reap the rewards of consolidating your debt. Not only is it a good financial move, but you’ll simplify your life and reduce your risk of accidentally missing a payment and getting dinged with a late fee.
Five Tips for a Successful Transfer
So, you’ve done your homework and determined a balance transfer is right for you. You still need a plan to choose the best way to consolidate your debt. These tips will help you get the most from your efforts and avoid common pitfalls.
- Remind yourself of your goals. Transferring your debt does not mean it will go away. You are simply moving your debt so you can pay it off faster and stay organized. Once you complete your transfer, do not let your balances creep back up.
- Beware of fees. Many credit card companies charge a fee to transfer a balance, sometimes as much as 5% of the amount you’re moving over. Read the fine print of any offer and make sure the fee is not wiping out your savings.
- Know your rates. If your rate for new charges is different from your transferred balance, watch out! It’s common for companies to apply payments to your lower rate balance first, costing you extra on the higher rate balance.
- Cut your cost, not your payment. This is not the time to make minimum payments. You’ll just lengthen the time until you’re free of debt, and you’ll reduce the benefit you get from a transfer.
- Avoid “Rinse and Repeat.” You can’t put off paying your debt by transferring your balance a second time. This is especially true if you got a low introductory rate that’s about to expire. That’s bad for your credit score, and makes it less likely that you’ll qualify for the best rates on future loans.
A balance transfer can be a great tool to save money and simplify your finances. You don’t have to go it alone. Talk with an expert from Hanscom FCU and get a free copy of your credit score along with solid, honest advice. We have options like a no-fee credit card balance transfer and a low-rate credit card. For more information about balance transfers, visit us at www.hfcu.org/balancetransfer
Once you’ve established that your debt is manageable and you’re committed to paying it off, contact us to help you plan. You’ll learn the best moves to reduce your debt and boost your credit score.
Next, work your plan until your debt is gone. Finally, stay committed to debt-free living by establishing an emergency savings account and planning ahead for known expenses.
Pay Yourself First for Peace of Mind
We automatically do some things every day because they're good for us: Brush our teeth. Buckle our seatbelts. Deposit money into our savings accounts. Oops – maybe scratch that last one.
If you'd like to build your savings but lack the money, time or discipline to make deposits, you're not alone. But now is the perfect time to get in the habit of saving, and we have an ideal way for you to save automatically with each paycheck.
Our CU Thrive Account allows you to designate an amount of money to save every month, from $5 to $500. You choose how often to transfer funds from your Hanscom FCU checking account - with every paycheck, once or twice a month, or every week.
After one year, your CU Thrive account matures, and the whole amount, including your dividends, is transferred into your primary savings account. You can renew your CU Thrive and keep saving.
Automatic transfers ensure that you don’t overlook your savings goals. Since the money isn’t in your checking account, you’re less tempted to spend it. Plus, CU Thrive has an attractive rate to make saving even more rewarding.
Even if you can only save a small amount at first, you’re developing a savings habit. As you see the balance grow, you’ll know the peace of mind that comes from having a cushion against a financial downturn.
Take this habit to the next step and set a goal. Save for a new car, prepare for a special purchase, or build an emergency fund. Knowing why you are saving makes it easier to achieve.
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