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Updated on Wednesday, June 14, 2017
If you have credit card debt, you are probably paying a high (double-digit) interest rate. One of the best ways to get out of debt faster is to use a 0% balance transfer offer. At MagnifyMoney, our favorite balance transfers have no balance transfer fee. Alliant Credit Union — a credit union that anyone can join — is offering a no-fee 0% balance transfer for 12 months. Although there are longer 0% balance transfers on the market, this is a solid no-fee option that can help you save money and become debt-free faster.
One added perk: Once you become a member of the credit union to take advantage of the balance transfer offer, you will also be able to take advantage of Alliant’s other competitive products. They offer a savings account that pays 1.05% APY. They offer 2.5% cash back on a new credit card. And their mortgage and auto loan rates are some of the lowest in the country. Alliant, one of our favorite credit unions in the country, provides the value you expect from a credit union with the user interface and digital tools that you would expect from a bank.
The Visa® Platinum Card from Alliant CU is a very simple, straightforward credit card. There is a $0 annual fee, and there are no rewards. You will probably be given a 0% introductory rate for 12 months on purchases and balance transfers that you have the card (more on that later). There is a fee for the balance transfer, currently Either $5 or 2% of the amount of each transfer, whichever is greater. After 12 months, the APR will range from 11.24%–23.24% Variable, depending upon your credit score.
Unfortunately, there is one part of this card that is a little complicated — and could lead to disappointment. You are not guaranteed the 0% introductory rate for 12 months. Depending upon your credit score, the APR may not be the 0% intro APR being advertised.
In order to get the credit card, you will need to become a member of the credit union. There are a number of ways that you can become a member. Some of the ways are free (for example, you live in a community in Illinois that is covered). But for most people, the easiest way to join is to make a $10 donation to Foster Care to Success. This is an organization that serves foster teens across the U.S. that are “ageing out” of the system. Once you make that contribution, you will be eligible to join the credit union and get the credit card (along with other credit union products). The application process is easy — you just need to select “not a member” at the beginning of the process, and it will walk you through the membership process as part of your credit card application.
The credit card does offer some standard credit card perks, like $0 fraud liability and rental car insurance. However, the real value is the low interest rate that can help you become debt-free fast.
If you want to earn rewards, Alliant does offer another card — the Visa Platinum Rewards Card. This card has the same balance transfer offer (0% for 12 months with no balance transfer fee). But with this card, you also earn rewards. You can earn 2 points for every $1 spent on the card. However, the APRs (after the balance transfer period) will be higher. In general, we advise people to separate their spending from their borrowing. Cards that offer no rewards tend to have lower interest rates, and cards with rewards have higher interest rates — as we see in this case. If you are looking to become debt-free, it is probably better to ignore rewards and get the lowest interest rate possible.
Alliant targets people with good or excellent credit. In general, that means you have a decent chance of being approved if your score is in the mid-600s, but you have a much better chance of being approved if your score is above 700.
In addition, Alliant (like all lenders) will need to be comfortable that you will be able to afford your payments. That means you will need to have a steady source of income. In addition, the lender will likely look at your total debt in relation to your income. If you have too much debt, you will find it more difficult to get approved.
It is from a credit union.
At MagnifyMoney, we like credit unions — in theory. As member-owned organizations, credit unions do not need to worry about shareholders and should be able to offer better value and lower interest rates. Unfortunately, far too many credit unions have websites that look like they were designed in the 1990s. With Alliant, we finally have a credit union that has made the application process easy, and has a great website. Alliant is delivering on the true potential of a credit union.
It is not the longest balance transfer.
There are a number of longer no-fee balance transfer options on the market. You can get a no-fee balance transfer for as long as 15 months from some of the leading banks in the country.
You are not guaranteed a 0% intro offer — the rate could be higher.
In the fine print, Alliant makes it clear that you might not get a 0% intro rate. The only silver lining: Alliant is willing to give intro rates to people with less than perfect credit.
Joining the credit union costs money.
If you can’t find a free way to join the credit union, you will have to make a $10 donation. We certainly like the cause that you would be supporting. However, it is still additional money that you would need to spend in order to get access to the product.
Completing the balance transfer is easy. During the application process, you can provide the credit card number of your existing credit cards (where the debt is located now). Alliant will then make a payment to your existing credit card companies.
Alternatively, you can call Alliant once you have the card to complete the balance transfer on the phone.
Just remember these tips:
- If you start the balance transfer close to the payment date, you might want to make the minimum payment to ensure you don’t get hit with any late charges. Although balance transfers usually process quickly — they can take a couple of weeks. And you would not want to get stuck with a late fee.
- Get the transfer done as quickly as possible. The 0% introductory rate for 12 months is from when you open the account — not from when you transfer the debt. The faster your transfer the debt, the more money you can save.
If you have credit card debt that you think you can pay off in a year, this is a great option. With 0% interest for one year — you can pay down your debt quickly. If you think it will take longer to pay off your debt, you might want to consider a longer balance transfer from a more traditional bank.
Yes, anyone can join. During the application process, you will be asked if you are already a member of the credit union. Just select “not a member” and you can join during the application process.
Once the introductory period is over, interest will start to accrue at the standard purchase interest rate on a go-forward basis. Interest during the introductory period is waived — so you do not need to worry about a retroactive interest charge.
In the short term, your credit score will probably take a small hit (5-10 points) because you applied for new credit. However, over time, a balance transfer can increase your credit score with proper practices. This is because while new credit makes up 10% of your credit score, the amount you owe accounts for 30%. By using a balance transfer, you will reduce your interest rate. That should help you get out of debt a lot faster.