Stop Wasting Money on High Interest Credit Cards
You’ve got better things to do with your money than waste it on high-interest credit cards. You have important financial goals, higher-yield savings options, or just something on your wish list you would rather get than pay off items you have already purchased and the interest on top of that.
One of the most common ways to tackle the debt on those high-interest credit cards is to take advantage of a balance transfer promotional rate. This method transfers your existing balance to a new card with a low rate for a certain amount of time. How much does this save you? Here’s a scenario…
- You have a $6,000 remaining balance on a store credit card with a 24.99% APR. You have been paying $260 a month, but feel like you are getting nowhere.
- At that pace, it will take you nearly three years to pay that off and you will have paid $2,263 in interest over that period.
- If you were to transfer that balance today to a card with a low promotional rate over the next 24 months, you could continue to pay that $260* a month and be paid off at the end of the promotional period, having only paid $187 in interest along the way. Check out the math in the image below.
Now, run your scenario through our calculator. How much could you save in interest, and how much quicker could you pay off your debt?
Not interested in transferring a balance? Check out this blog post for other powerful ways to pay down debt.
Tips For Success
Paying off debt is hard. That’s why nearly half of Americans carry a credit card balance from month to month. Here are a few tips to help you be successful.
Create A Budget
Knowing where your money goes every month will let you see how much you can put towards paying off your credit card debt. If it’s still not enough for you, it could be time to evaluate getting a side hustle to help you work towards your goal. And it can be very tempting to splurge when extra income comes in (like a tax refund), but those are great opportunities to put a more significant dent into that debt.
Pull Back On Savings
Once you have a budget, I hope there is a line item for savings. We would always advocate for saving towards an emergency fund and for those periodic expenses that come up throughout the year. However, once you have a safety net in place, it’s worth considering the tradeoff of saving more in a low-interest account vs. paying off higher interest debt.
Automate Your Payments
No matter what plan you settle on to pay down your debt, automating your payment is a great way to make sure you are making those payments as planned. If you open up the opportunity to renegotiate your priorities every month, you are more likely to get off course.
Take The Card Out Of Your “Wallet”
Debt reduction only works if you stop adding to the balance with new purchases. Start by taking the physical card out of your wallet and putting it somewhere safe. Next, tackle all digital wallets, and remove it from Apple Pay, Google Pay, or Samsung Pay. Delete the card from shopping sites where you have saved it, think through the ones you frequent like Amazon, Etsy, Walmart, etc…
As always, our team of dedicated financial coaches is here to work with you to create a plan and help you stick with it. Let us know how we can help.
CUlookup Calculator Disclaimer: CULookup.com financial calculators are provided as a free service to our users. The information supplied by these calculators is from sources and based on calculations that we believe to be reliable, but no guarantee, explicit or implied, is made regarding their accuracy or applicability to your specific circumstances. All examples are hypothetical and are for illustrative purposes, and are not intended to provide investment advice. CULookup.com does not accept any liability for loss or damage whatsoever, which may be attributable to the reliance on and use of the calculators. Use of any calculator shall constitute acceptance of the terms of this agreement. We urge you to consider finding a qualified professional for advice with regard to your personal finance issues.
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