Balance Transfers - What You Need to Know

Posted by Jeremy Wascak March 04, 2020 Categories: Budgeting Credit Cards Loans Saving

Are you carrying a balance on a high-interest credit card? Have you considered doing a balance transfer to a new card with a lower rate?

How does a balance transfer work, you ask? A balance transfer happens when you move a current balance from a high interest rate credit card to a new or existing card, like the Towpath CU EverydayCredit  card, that typically has a lower interest rate.

Simply put, you’re using one card to pay off another, and you’re getting a lower interest rate in the process.

As you consider your options, keep these questions in mind:

  • Will the amount you save in interest be higher than any balance transfer fees you may incur?
  • Can you pay off the balance you’re transferring during the promotional period?

How to choose the right credit card to do a balance transfer to.

First, what you want to look for is a card that makes sense for your personal finances (meaning it should save you money). Additionally, there are a couple of other things to look for in a card that you transfer a balance to:

  • Is there a balance transfer fee? Most cards have a fee that you will need to pay in order to do a balance transfer. This fee will be applied to your balance once the transfer is complete and can range from 3% - 5% and usually has a minimum amount, usually $10.00. For example, at Towpath Credit Union, our fee is 3% or $10.00, whichever is greater.
  • What is the interest rate on the transferred balance? The best cards to transfer a balance to are ones with a low annual percentage rate (APR). This can also include and introductory offer or a promotional offer. Towpath CU has an introductory offer of 3.99% APR on balance transfers done during the first 6 months.* 
  • How long is the rate good for? A balance transfer should help you pay down your debt by giving you time to do so without paying high interest rates. Look for a rate with a term long enough to help you maximize what you can pay on your balance. 
  • What is the rate at the end of the promo period? Another important thing to look for is what will the rate be after the promotional period ends? After the promotion term is over, the rate normally goes up to the same rate the card charges for purchases. The goal is to have the balance paid down by the time the rate goes up. If you're not sure if you can pay it all off within the promotional period, this is an important factor to consider. Banks rates average 15.27% but can reach as high as 29.99%, while Credit Unions average 11.56%**. Towpath Credit Unions rates start as low as 8.00%!
  • Are there any other fees on the card? One other thing to check for is if there are any other fees, such as an annual fee. Hidden fees can add up, causing you to spend less on paying down your debt. There is no annual fee on any of the credit cards offered at Towpath Credit Union.

Ready to transfer a high rate balance to a Towpath Credit Union Mastercard?

  • Already have an EverydayCredit or EverydayRewards Mastercard with Towpath Credit Union?
    • Great! You can set up a balance transfer a couple of different ways - You can sign into your online account and enter the information. Or you can stop into one of our branches or give us a call and we would be happy to assist you.
    • You’ll need the account number and address for the account you want to transfer the balance from and the amount you want to transfer.
    • The amount you can transfer depends on your credit limit.
    • You’ll need to continue to make payments on your old account until the new card issuer notifies you that the balance transfer has been completed. This could take up to 10-14 business days.
  • Don't have an EverydayCredit or EverydayRewards Mastercard but want to apply?


*Special reduced annual percentage rate (APR) is valid on qualifying balance transfers posted on or within six (6) months of account opening. Special reduced rate is good for six (6) months from the first qualifying transaction post date. The promotional annual percentage rate (APR) will return to the individual cardholder's standard rate upon the completion of the offer cycle. The APR is not valid on purchases or cash advances. All purchases are subject to credit approval. Terms and conditions subject to change. Some restrictions apply.

**Based on June 2019 credit card reports (via