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.
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A new GOBankingRates survey found that 15% of Americans indeed use their credit card to pay off their credit cards. While the age bracket using this tactic the most is the 35-to-44 age group at 20%, and the one using it the least is the 65 and over age group at 13%, the practice is used across the generational board, the survey finds.
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 low or 0% 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. There may be fees tied to the balance transfer, but depending on how much those are and how much you owe, they could be cheaper than keeping your debt on your current card.
“Often, the new card is offering a special promotional interest of 0% for a temporary period…
