At Advia Credit Union, we understand that managing multiple debts can be a daunting task and put a strain on your financial well-being. That's why we are committed to helping our valued members regain control of their finances and achieve a debt-free future.
In this article, we will show you how a debt consolidation may be the right option for you, focusing on the merits of balance transfers as a strategy to alleviate debt-related concerns.
If you have found yourself feeling overwhelmed by a high interest credit card, you’re not alone.
According to the Federal Reserve Bank of New York, the average credit card debt per borrower in Q3 of 2022 was $5,474, or about $617 higher than the year before. Factors that caused this change are linked to inflation, or the increase in goods and services. Overall, this adds up to $38 billion in new debt in a single quarter and represents a 15% increase year-over-year—the largest change in two decades.1
Debt consolidation is a process that combines multiple debts into a single, more manageable loan. While not all financial institutions accept certain types of debt, Advia accepts various types to help our members. By consolidating debts, you can streamline your repayment process and potentially reduce your overall interest rates, leading to more savings in the long run.
One common and often effective method of debt consolidation is through balance transfers, which involve transferring high-interest credit card balances to another credit card, typically with a lower interest rate. This approach not only simplifies debt management but also offers several advantages that make it a smart choice for those seeking to eliminate debt efficiently.
Typical Costs of Balance Transfers
When considering a balance transfer to another credit card, it’s common to pay an upfront fee of 3-5% of the transferred amount.2 However, now through September 30, 2023, Advia is waiving our own 3% fee for a balance transfer for added member savings.*
Three Benefits of Balance Transfers:
Consolidating debt via balance transfers (especially credit card balances) can be significantly beneficial. Here's why:
- Save on Interest Charges: With balance transfers, you have the opportunity to transfer your high-interest credit card balances to a new credit card that offers a lower interest rate, which could save you a lot of money in the long term. By taking advantage of this lower rate, you can save a significant amount of money on interest charges, allowing you to pay off your debt faster and with less financial strain.
- Simplify Repayment: Keeping track of multiple debts with different due dates, interest rates, and minimum payment requirements can be overwhelming. By consolidating your debts through balance transfers, you can streamline your repayment process. With just one payment to make and one due date to remember, you'll likely find it easier to stay organized and avoid late payment penalties.
- Improved Credit Score: High credit card balances can negatively impact your credit score. By consolidating your credit card debts through balance transfers, you can lower your credit utilization ratio. This ratio represents the amount of credit you're using compared to your total available credit. Reducing your credit utilization ratio can have a positive impact on your credit score, potentially opening doors to better financial opportunities in the future. Looking to improve your credit score overall? We can help with our Credit Builder Loan.
Why the increase in credit card usage?
Because inflation erodes the purchasing power of money over time, consumers have been turning to credit cards to maintain their standard of living. With the rising cost of goods and services, individuals can find it challenging to meet their expenses with their existing income. As a result, they may resort to credit card usage to bridge the gap between their purchasing power and the increasing prices.3
According to the U.S. Bureau of Labor Statistics, the Consumer Price Index (CPI), a common measure of inflation, increased by 4.9% the 12-month period ending in April 2023. This erosion in purchasing power motivates individuals to rely on credit cards to sustain their spending habits, leading to a surge in credit card usage.
Inflation also influences interest rates, which directly impact credit card users. When inflation rises, central banks often respond by increasing interest rates to curb inflationary pressures and stabilize the economy. As a result, credit card issuers raise their interest rates to reflect the higher cost of borrowing imposed on them by financial institutions.
Stay ahead of the curve and hit reset on your debt!
There are many reasons why people find themselves struggling with debt. The current economic climate, changing shopping and purchasing patterns, the ubiquitous influence of pay-day lending institutions in our communities, and easy access to high-interest credit cards/store cards are just to name a few.4 For this reason, Advia is introducing our ½-off transferred credit card rates and waiving transfer fees for new and existing members looking to consolidate outside debt beginning on June 1 through the end of summer.*
We are proud to offer to our members incredible rates as low as 8.90% APR for the entire life of the loan on transferred debts.** That means, when you transfer to Advia, all your past debts can not only be consolidated into one simplified payment, but they will also be kept at the same 8.90% interest rate.
Our aim is to streamline the debt consolidation process and remove barriers through the elimination of transfer fees often imposed by other financial institutions.3 Ultimately, it’s about saving our members money. To that end, we are uniquely promoting this debt consolidation strategy through a credit card rather than a loan because of the comparatively great rates we are able to offer with our Visa Cards.
Considering your credit card options? Advia is here to help.
Whether you have multiple credit cards and want to simplify your payment options or are simply looking for a lower interest rate, we want to provide you with options. In this article, we hope to have prepared you with enough information to take a moment and consider your current situation. In the end, we at Advia want you to know that we understand, and we are here to help.
Contact us today to l earn more about our debt consolidation and balance transfer options and how we can help you on your journey to financial wellness.
Sources:
- Federal Reserve Bank of New York
- Bankrate.com
- Advia internal analysis
- CreditCards.com
*Applicable to the Advia Platinum Fixed Rate & Advantage Point Credit Card only. For Variable Rate Card, a balance transfer fee of either $10 or 3% of the amount transferred, whichever is greater, will be assessed for each balance transfer processed on that account. Must be 18 or older to apply. All offers & rates effective June 1, 2023 & subject to change at any time. Rates & terms may vary based on creditworthiness of borrower & term of loan. Floor rates & restrictions apply. All loans subject to credit approval. Equal Opportunity Lender.
**Fixed Rate Credit Card Annual Percentages Rate: 8.90% - 16.90%. APR will not increase while the plan is open. Call 844.238.4228 for details. Advantage Points Card APR: 15.25% - 18.00%. Penalties apply for late and missed payments. Variable Rate Information: On variable rate programs, your APR may vary quarterly. The index is the highest Prime Rate charged by banks as published in the Wall Street Journal as of the last business day of each quarter. A quarter is defined as a calendar quarter beginning January 1, April 1, July 1, and October 1. Your APR is equal to: as low as Prime Index+ 7.00%. An increase in the index will result in an increase to your APR.