Do you feel like you are paying a ton of money each month towards your debt and that the amount you owe never seems to really change? Credit Card interest can add up quickly since most interest rates are between 15-25% causing you to fall into the Minimum Payment trap which is designed to be a never ending cycle. If you are someone that is paying the minimum payments on your credit cards we need to change this habit……LIKE NOW.
One great way to pay down Credit Card debt quickly is to open another Credit Card that allows balance transfers. This will allow you to make payments towards your debt without having to pay any interest! Below I will outline the pro’s and con’s of opening another credit card with the intent to get out of Credit Card debt as quickly as possible.
Low interest rates:
Depending on your credit, you can usually find offers that will offer 0% interest on balance transfers for anywhere from 12-24 months. If your balance is $10,000 and you have an interest rate of 24.99%, you will be paying $2,499 in INTEREST ALONE over the next 12 months. By transferring to a 0% account, you will be able to put the $2,499 towards the principle which will allow you to get out of debt much quicker.
If you have multiple cards, you can transfer all of them to the new credit card you just opened via a balance transfer and then you only have to focus on paying the one card off. This can be easier for some as that means only one payment needs to be made each month.
Most cards will charge you a fee to transfer the balance of your debt and it’s usually in the range of 3-5%. Make sure you take this into consideration on whether or not it’s worth your while to go this route to pay off your debt in the quickest way possible. If you are serious about paying off your debt, it can be looked at as a much cheaper alternative to paying the much higher interest rate that you are currently paying.
Adding to your debt:
If you feel that you are in credit card debt because of your lifestyle and spending habits, BE VERY CAUTIOUS when opening up more credit. If you haven’t identified why you are in debt and made adjustments in your life to get on the path towards financial freedom, you are risking going into even more debt.
Is it worth it for me?
As long as you have your spending under control and can trust yourself not to get into even more debt, balance transfers are a great way to expedite the time it will take you to pay off your credit card debt. Credit card debt is usually the worst type of debt and the quicker you can get it off your budget the quicker you can utilize that money into investing for your financially free future!!