Relief From Monster Credit Card Interest

Credit Card Balance Transfer

               Most of us know the crushing feeling credit card debt can put on a person. We can all agree that our hard-earned dollars would better serve us in other parts of our lives instead of having it disappear from us each month.  

               Now, I would also like to acknowledge the fact that we don’t end up with large amounts of debt overnight. These are decisions that were made, ultimately by us which have accumulated over time. I’m sure that even now you have these letters arrive in the mail from one scoundrel or another (Wells Fargo, Bank of America, Sun Trust, and the list goes on) celebrating the news that you’ve just been approved! You now have been given the opportunity to shackle yourself with the chains of debt! Yippee! Every future decision you make surrounding the quality of your life will be dependent on your willpower to keep these parasites away.

               Generally speaking, there are two different types of credit card users. First, there is the last resort, absolutely need to eat and put gas in my car to get to work type of credit card user. Then there’s the other type of credit card user. You know the type of asshole who visits Las Vegas for the weekend to rent a Lamborghini, with an executive suite at Ceasar’s Palace, saying “hit me” at every Black Jack table he passes while “poppin’ bottles” at the club every night. Yeah, that guy. Forget the Black Jack, someone please hit this clown with a right hook and knock him back to his senses. Well, this 0% balance transfer option is not for this guy, he’s got a rough road ahead and needs to read Principles of Personal Finance.

               So who is this 0% balance transfer for then? This is for those of us who have turned to credit cards as a last resort during tough times. With all of life’s crazy twists and turns, ups and downs, invariably this can potentially happen to all of us. Hey, you have to do whatever it takes to survive. You’ve now accumulated a certain amount of credit card debt, and need to put a plan in place to pay it off within a set time frame.

To further fit your individual needs you can use this easy to follow 4 step guide to determine whether this is something that can benefit you or not.

First, start by identifying how much you currently have in credit card debt. For example, you may have two or three different credit cards with different balances on them. Add them all up and find out exactly how much you owe.

Second, you want to review your monthly credit card statement to determine if are currently being charged interest, and at what percentage. If you have any cards recently opened they may be in an interest free period and in that case do your best to pay it off asap. If your credit card accounts are older than 12 to 18 months you are most likely paying interest on them.

Third, we’re going to assume you haven’t made any major purchases recently and have not had a credit report run in the past 90 days. This will ensure that you receive a credit limit high enough to roll over your current balances to. While there are several options to choose from here are 3 different balance transfer cards that I have personally used and had good experiences with.

Citi Diamond21 months interest free period – Now this is an unbelievable interest free period of almost two years. This is not a common offer among most companies. There are no excuses not to pay off your total credit card balance after rolling it over and receiving two years interest free.

Chase Freedom15 months interest free period – This is also a decent time period to pay off your credit card debt. Just make sure to make the balance transfer within 60 days of opening the account.

Capital One Venture One Rewards12 months interest free period – While you should be focused on getting rid of debt first, this option actually comes with a 20,000 bonus miles earning on your first $1,000.

The goal is to pay the balance down aggressively as interest is now held off and all your payments go towards principle. Once you get approved and receive your new card in the mail, call them and let them know you are doing a balance transfer. This usually comes with a one time 3% to 5% fee. This is pennies compared to how much that monthly interest is costing you.

Fourth, and final step may be controversial as some speculate that closing credit card accounts can damage your credit score. I disagree. I believe it’s way more dangerous to keep a high interest credit card open and have the temptation to use it available. If you close the account that option is gone. Don’t worry, these guys will be waiting to welcome you back in a few months with an introductory offer. Plus, credit scores are not as fragile as we were raised to believe. I’ve tested credit score many times and it always recovers within 90 days. Just make sure you never have any late payments and you’re in good shape.

A question may arise for some, why should I pay off my credit card? What’s the big deal if I pay interest and make the minimum payment every month? It’s only like $97 a month right, I can easily make that payment. Well, technically you’re right. However, if you stop looking at the money spent towards this on a monthly basis, and review the account on a lifetime basis that may help put things into perspective. Quickly it becomes apparent that the $3,500 initially charged on that card takes 15 years to pay off and costs you a total of $7,459 over the years. It’s like death by a thousand cuts.

Credit cards can be an amazing tool if used responsibly and effectively. Once we get a handle on old debt, we can move towards the present and things will start to get real fun. Once all debts are paid off we can start exploring some of the excellent Rewards cards, which are best to pay in full every month. This is due to awesome rewards structures but horrible interest rates. It’s not a problem if you pay your balance in full each month, interest will never be applied. However, for now let’s focus on paying off all this old stuff asap so we can get to the good stuff. I hope this helps to clear things up a bit and help you head down the right direction towards freedom. Until next time, keep pushing and progressing.

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jordan@incomeoverexpense.com

income over expense

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