Holiday hangover typically hits hard in January with the receipt of the dreaded credit card bill. Excessive spending coupled with high interest rates can put many cardholders over a barrel. Unable to pay off the total amount at once, carrying a credit card balance can create a vicious cycle of paying double or triple the amount for merchandise procured months ago.
The Iowa Credit Union League recently reported that almost 30% of surveyed Iowans have no idea how they will cover their newfound holiday debt.
"It is not uncommon to spend more than you planned during the holidays, and much of what you spend ends up on your credit card," Emily Caropreso, director of communications for the Iowa Credit Union League tells KCCI Des Moines.
Although there may be no way to erase holiday purchases, there are ways to minimize the financial damage by transferring high rate credit card balances over to credit union plastic.
Informa Research Services told Bankrate.com that the typical credit union rewards credit card had an average rate of 9.38% (as of November 2012); compared with 12.89% for larger banks.
One reason a credit union credit card is so advantageous is that credit union loans are capped at 18%. While banks can charge 30% or more on credit cards, credit union members know that their interest rate is kept in check.
Additionally, credit union credit card late payment fees are typically lower than big banks (less than $25) and many offer a five day grace period for late payments versus the one day found at the banks.
Another important feature for those trapped in a high interest rate card is that most credit unions don’t charge a fee for balance transfers.
Many credit unions promote balance transfer offers around the first of the year. Jade Beckman, vice president of consumer loans at Mountain America Credit Union ($3 billion, West Jordan, UT) says that the primary reason for a balance transfer offer is to ensure greater savings to the member.
“Mountain America Credit Union helps members secure lower credit card rates and pay down debt faster through its credit card balance transfer program. Although there isn’t one in effect currently, on occasion a promotional rate offers members even greater interest savings. And helping members, of course, is the credit union’s primary objective.”
Credit unions currently offering hot balance transfer promotions include Pentagon Federal Credit Union ($15 billion, Alexandria, VA). PenFed Rewards Cards are being offered for 0% APR for 18 months on transfers made between January 1, 2013 and March 31, 2013. The credit union’s other line of credit cards are also offered at a low promotional rate until March 31, 2013 too.
Virginia Credit Union ($2.3 billion, Richmond, VA) just wrapped up its balance transfer campaign promoting rates of 2.99% - 4.99% APR, no balance transfer fee and members can lock in their special low rate for two years.
For Navy Federal Credit Union ($52 billion, Vienna VA), including attractive credit card rates and promotions helped to increase its card portfolio by $1 billion in 2012--17% over the previous year.
Dana DeSarno, Lending Spokesperson for Navy Federal told Credit Unions Online that consumers should review their current credit card interest rates and check out their credit union.
“This January, many consumers are taking stock of their financial well-being. Navy Federal encourages members to conduct an overall credit inventory by reviewing the existing balances and interest rates on their credit cards. Through the end of February, members can save money by consolidating their current high-rate credit card balances from other financial institutions onto a new or existing Navy Federal credit card offering a 0% fixed introductory APR on balance transfers for 12 months with no balance transfer fee--which can save hundreds of dollars.”
“We are one of the very few issuers in the industry that does not charge a balance transfer fee making our balance transfer promotion one of the most competitive around,” DeSarno adds. “We're happy to offer it to both new members and existing cardholders. This is one way for members to get relief from high-rate balances, possibly accrued over the holiday season. And, even when using Navy Federal's credit cards on new purchases the rate will be as low as 7.99% and will never exceed 18%--still remarkably low compared to many other financial institutions.”
Ditch high rates and fees commonly associated with the big banks and find a credit union to reduce your credit card payments today.By Gina Ragusa