Life happens, and life can be expensive. Maybe the radiator of your car blew out and you suddenly find yourself handing over your credit card to cover a $2,000 mechanic bill. Or you have to suddenly fly across the country for a week to take care of a sick parent. Or, perhaps you lost your job and are out of work for six months.
There are endless reasons why you had to turn your credit card into a piggy bank for a while, but overspending could mean months or even years of throwing away money on credit card interest…that is, unless you use this handy trick to never pay interest on a credit card again!
Stop Paying Credit Card Interest
Credit card interest is money that you are literally throwing away. According to LowCards.com, the average credit card APR is 14.9%. That means that if you have $10,000 in credit card debt at 14.9% interest and make the minimum payment each month without adding any new charges, you will pay an extra $4,409 in interest by the time you pay off your card! You’ll pay even more interest if you keep adding new charges to the card. Think about what you could do with an extra $4,409 in your pocket. That’s enough money for an amazing international vacation, money you could put toward retirement, or money that could help you start saving for your children’s college.
Introducing the Credit Card Balance Transfer
Every day that you leave the unpaid debt on your credit card, you are accumulating interest, which is the same as throwing money away. You don’t have to let this happen. All credit card companies want your business, which is why they will offer you a wide range of really great deals to open a new credit card account with them. Most cards will allow you to perform a “balance transfer,” and some will offer an introductory no interest period on that transfer. In other words, they will let you transfer the existing balance you have on your other credit cards to the new card and won’t charge you any interest on the amount during the grace period. Some current deals listed on NerdWallet.
A balance transfer with no interest means that you can compile your debt from several credit cards onto a single card so that all of your debt is in one place. You can then begin chipping away at your debt. You’ll actually be able to pay your debt off sooner, because the credit card company won’t be piling interest debt onto your balance!
Drawbacks of the Balance Transfer
A balance transfer isn’t a magical solution to your credit card debt. (Learn how to Get Off the Credit Card Roller Coaster.) There are some drawbacks that you need to be aware of. First of all, you’ll need to have good credit in order to be approved for the credit cards with the best balance transfer promotions and to get a credit card limit that will allow you to transfer all or as much as your debt as possible. (Learn how to Clean Up Your Credit.)