A common financial dilemma is how to get out of debt the fastest, cheapest way possible.
There are 3 fundamental steps:
- Don’t increase your debt.
- Reduce the interest rate you must pay.
- Reduce the principal balance of your debt.
When you slash your interest rate, you reduce the amount you have to pay each month. That extra savings can be the ticket to getting ahead by allowing you to pay down more of your principal balance each month.
One of the easiest tools you can use to start paying less interest on your debt is a balance transfer card. But the problem with these cards is that they typically come with a bunch of fees that offset the savings.
It may seem strange to think about using a credit card to help you get out of debt, since that’s how many people get into financial trouble in the first place! But I’ll tell you how to use a balance transfer credit card wisely so you save money and get rid of your nagging debt as quickly as possible.
How To Get Rid of Debt
If you’re struggling with debt, but still have good credit, using a balance transfer card is one of the easiest ways to reduce your monthly payments.
With less interest to pay your creditors, it’s easier stop relying on credit cards, save for emergencies, and put other financial safety nets (like insurance) in place.
4 Tips to Get Out of Debt
To freeze the amount of debt you owe, follow these 4 tips:
- Create a spending plan so your expenses never exceed your income.
- Stop making credit card charges.
- Resist the temptation to finance any additional purchases.
- Make your monthly payments on time so you don’t rack up late fees.
How Does a Balance Transfer Credit Card Work?
A balance transfer credit card is a special type of card that offers low or no interest during a promotional period if you pay down another account—like a credit card or an installment loan—and move all or a portion of your balance to the credit card account.
A typical balance transfer promotion might last from 6 to 24 months after you make a transfer and then the interest rate can increase dramatically. The rate you’re offered will be based on your credit score–but in many cases it still ends up being less expensive than the original rate you were trying to get away from.
How Does a Balance Transfer Credit Card Save Money?
By transferring high interest debt to a low or no interest card, you can come out ahead. The money you save can be used to pay down the balance transfer card–or any other expensive debt–even faster.
Do some research to find a balance transfer card that’s right for your situation, and start paying less interest today.