Simplify, Save, and Take Control: Understanding Balance Transfers
🕒 3-minute read
At Rave Financial, we believe in giving you the tools and knowledge to make smart financial moves that help you stress less and thrive more. One option worth exploring? A balance transfer—a smart, strategic way to move existing debt to a new account, often with a lower interest rate.
Let’s break it down so you can decide if it’s the right step for you.
What Is a Balance Transfer?
A balance transfer allows you to move debt—usually from one credit card or loan—to another account, often one with more favorable terms. The goal? To save money on interest, consolidate your payments, or even release a cosigner from a financial obligation.
Every situation is unique, but a balance transfer could be just what you need to simplify your financial life.
What Types of Debt Can Be Transferred?
Most types of debt owed to a financial institution are eligible for transfer. This includes credit card balances, car loans, and installment loans. However, some exceptions apply. For example, very large debts may not be eligible if your new credit limit isn’t high enough. And personal debts—like money borrowed from friends or family—typically can’t be transferred.
When Does a Balance Transfer Make Sense?
We get it—every dollar matters. Here’s when a balance transfer could be the right call:
- To Save on Interest: If you’re currently paying high interest, transferring to a lower-rate product could save you big. For example, transferring a $10,000 balance from a 28% APR to an 8% APR could save you around $3,500 over 36 months.
- To Streamline Your Finances: Managing multiple payments and due dates? A balance transfer can simplify your financial life with one easy payment.
- To Remove a Cosigner: If someone co-signed a loan with you and you’re ready to take full ownership, a balance transfer can help release them from the responsibility.
When Might It Not Be the Best Move?
A balance transfer is a powerful tool—but only when used wisely. Consider these cases when it might not be the best fit:
- If your current debt already has low or no interest—like medical debt or accounts in a 0% promo period—a transfer might not save you anything.
- If the transfer fees outweigh the interest savings. (Most balance transfer fees range between 2–5%, depending on the lender.)
At Rave Financial, we’re here to help you crunch the numbers and decide if it’s worth it.
How Do I Start a Balance Transfer?
First, you’ll want to identify the best account to transfer to. Some credit cards (like those we offer) may come with a lower APR on balance transfers. That’s a great opportunity to pay down debt without the added interest.
Once your new account is open, you can typically:
- Initiate the transfer online
- Use convenience checks provided by the new card issuer
- Call your new lender and request a transfer
From there, the financial institutions handle the rest behind the scenes. Simple.
What If You Can’t Transfer Everything?
Sometimes your new credit limit won’t cover all the balances you want to transfer. That’s okay! It just means you’ll need to be a bit strategic.
- If saving money is your main goal, focus on transferring the highest-interest debts first.
- If your goal is simplifying, but most accounts can’t be moved, it may not be worth it right now.
You can also time your transfer strategically—like waiting for a promotional period to end before acting.
Empower Your Finances With Rave
Balance transfers aren’t a one-size-fits-all solution, but they can be a powerful part of your financial toolkit. When used wisely, they offer a smart way to pay less interest, ease your money management, and regain control over your financial future.
Have questions or want to talk it through? We’re always here to help. Stop by your local Experience Center or give us a call today—let’s rave about what’s possible together.