Pros and cons of a balance transfer

When your monthly credit card payments are barely scratching the surface of your overall balance, it can make your debt feel overwhelming. The good news is that you might not have to keep battling with a steep credit card bill and a balance that won’t budge. Instead, you could benefit from a balance transfer credit card if your credit is still in good shape.

The low or zero percent introductory annual percentage rate (APR) could help you pay off your credit card balance faster, save you money on interest and even improve your credit score. But despite all the benefits of a balance transfer, it still may not be the right move for you once you consider the downsides. We’ve interviewed some experts to talk about the pros and cons of a balance transfer, so you can decide whether a balance transfer is the right move to accelerate your debt payoff.

Pros of balance transfers

There are multiple benefits of balance transfer credit cards, assuming you are eligible. Here’s a rundown of the biggest advantages:

You’ll pay less interest

The most important reason consumers pursue a balance transfer credit card is to take advantage of a low or 0 percent introductory APR offer. By transferring your debt to this new card, you start saving on interest immediately. Every payment you make goes directly toward reducing the amount you owe, which makes the balance transfer credit card a valuable tool for becoming debt-free. When more of your monthly payment goes towards the principal, you’ll pay off your debt faster and pay less interest overall.

“Credit card interest is very high at present, with rates from 18 percent to as high as 27 percent. Banks are allowed to charge high interest because credit card charges are unsecured loans. A balance transfer allows consumers to temporarily have a lower or no interest charge while they pay down debt.”

— Cyndie MartiniCEO and founder of Member Access Processing (MAP), the nation’s largest aggregator of Visa card services for credit unions

You can consolidate debt payments

Depending on the credit limit you’re granted, your new credit card may allow you to transfer multiple credit card debt balances onto one card. In turn, this streamlines your finances by allowing you to consolidate multiple payments. If you’ve been struggling to manage several due dates and payment amounts, this is extremely helpful.

“If you are dealing with multiple credit card debts, transferring all balances onto one card simplifies your financial management. You’ll now deal with just one monthly payment, making it easier to track and less likely for you to miss due dates,” Sudhir Khatwani, founder of The Money Mongers, says.

You can capitalize on the perks of a new card

The balance transfer credit card you choose could offer more than a 0 percent intro APR. It may also offer better overall benefits — possibly including cash back, rewards, discounts and more.