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Breaking Down Balance Transfers

Interested in Paying Less Interest?

Credit cards can be an effective way to earn cash rewards and pay for purchases later. However, when balances begin to build up on these cards, consumers can be faced with high interest rates and unforgiving terms.

According to CNBC, nearly half (47%) of U.S. adults, or about 120 million people, currently have credit card debt. So, if you’re part of that statistic, Elements is here to provide trusted advice on how a balance transfer may be beneficial to you – potentially saving you hundreds of dollars over the course of your payments. 

Key Questions

Our financial experts have identified these questions as our most commonly asked by our members:

What is a balance transfer?

When you move credit card debt from a card with a high interest rate to a different card with a lower interest rate and better terms, it’s called a balance transfer.

How can a balance transfer save me money?

Let’s say you’ve accumulated a large amount of debt on a card with a high annual percentage rate (APR), so transferring that balance to a credit card with a significantly lower interest rate means more of your payment will go to your principal. So, instead of the majority of your monthly payment going toward interest, more goes toward paying down your true debt.

Will I pay any fees for a balance transfer?

Many financial institutions charge a fee for initiating a balance transfer which is often in the range of 3% to 5%. However, Elements offers multiple credit cards that have no balance transfer fee – a unique offer thanks to our not-for-profit credit union status. In the case of other institutions, you’ll need to calculate the amount of cash you can save by reducing your interest rate. Then, take time to consider if paying the balance transfer fee is worth the interest rate savings.

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How do I start the balance transfer process?

While each financial institution’s process is different, Elements makes the balance transfer process easy. Simply contact our customer support team or visit your favorite Elements branch and our financial experts will guide you through applying for a card and moving the balance from another bank or credit union.

Transferring your credit card balance to a low or no interest card is a great financial tool to pay off debt. Make sure you’re calculating the costs by checking if there is a transfer fee, how much that is, and how long the no-interest window will last to pay off your balance.

- Abbey Askew | Business Development Manager and Credit Expert
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Important Considerations

Before starting the balance transfer process, it’s important to ask yourself:

Am I qualified for the promotional rate?

Much of the savings from a balance transfer comes from an initial promotional rate that’s offered for a short period of time. Before applying for the card, be sure to understand what you must do to qualify for that special rate.

Will I save money with the post-promotional interest rate?

While a low promotional interest rate can catch your eye, ensure that the rate that follows will be lower than the rate you’re currently paying. It’s best to pay as much of the balance off as possible during the promotional period, but a much higher post-promo rate could lead you into paying significant interest in the future.

What should my credit usage look like after the transfer?

As we explain in the Take Control of Your Credit Advice article, it’s critical to keep your credit usage lower than 30% to maintain or improve your credit score. For instance, if your credit card limit is $5,000, you’ll need to maintain a balance of $1,500 or less to keep your score in check. It’s especially important to consider this factor if you’re thinking about combining the balances of two existing credit cards to acquire the lower rate.

Is my credit card spending under control?

It’s critical to understand your spending patterns before even considering opening a new credit card. If you are prone to using your full credit limit on the cards you already have open, think about how increasing that total credit card limit could impact you. Explore our Using Credit Cards to Your Advantage Advice article for more tips on wise usage of cards. If you’re confident that you won’t rack up more debt, a balance transfer might work in your favor.

Contact Elements to Get Started

Have questions or need trusted advice? Our credit union experts are always here for you. Contact Elements Financial for support in all aspects of your financial life.


This information is provided for informational purposes only. It does not constitute legal, tax or financial advice. Consult with your tax, legal or financial adviser before taking any action.

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