Using 0% Cards to Dig Out of Debt
The average American has $6,354 in credit card debt.* (Can footnote Experian) If you, like many Americans, are paying the standard purchase rate, often near 18%, on this debt you are paying over $1,100 in interest annually to the banks.
The good news is that if you have been making your payments on time you likely have a good credit score. If you have a good credit score, banks are competing for your business and the balance you carry. This means that banks are willing to offer you 0% on the balances you have if you open a new credit
card with them and transfer the balance over.
Think about that, you can pay 0% just for receiving a new credit card. Please take advantage of what paying your bills timely has allowed you, the chance to avoid over $1,100 in interest annually.
What are 0% APR cards?
A 0% APR card is a credit card offer that includes an introductory period where interest will not be charged on balance transfers, purchases, or both. Usually, these offers come with several terms, including:
- What types of transactions fall under the offer:Some cards apply the offer only to balance transfers while others provide for interest-free purchases.
- How long you have to take advantage of the offers: Balance transfers typically have to be completed in the first few months of opening the new card.
- How long the interest-free period lasts: Introductory periods, where interest isn’t charged on the balance, typically range from 12 to 24 months.
- Whether it’s delayed interest: Delayed interest means if you don’t pay off the amount before the introductory period is over, you could be hit retroactively with “back interest” on the remaining balance.
How do 0% APR cards help with debt?
While it is straightforward to understand that not paying interest is a savings, it is important to understand how the process works. We are here to help
- Read the terms and conditions, balance transfers fees can range from 0% to 5%, you need to be prepared for any charge
- Choose the credit card you want, the could be the one with the longest 0% duration, lowest fee, or it could offer a nice cash back bonus when opening the card
- Apply online through the link, make sure to list the cards with balances you want to transfer to the new card. This has multiple benefits
- The balance will move to 0% as soon as possible
- Banks want to win balances from other banks
- Banks might adjust credit line upwards to bring over all of your business
- Make all payments on time, late payments may trigger an end to the 0% or a late fee
- Enjoy the fact that every cent of every payment made lowers your balance
We cannot emphasize point #5 enough. if you make a $100 payment each month for 18 months on an 18 month 0% interest card, you will pay down $1,800 in debt. The $6,300 balance will be reduce to $4,500.
There is a great opportunity to take advantage of how the banks compete to get yourself out of debt. We will help you through the process.