If you’re one of the millions of Americans harboring credit card debt, we have good news: paying it off isn’t as difficult as it might seem. Credit cards are great for emergency expenses or last-minute deals, but if you aren’t careful, you can rack up thousands of dollars in no time.
There are a few simple changes you can make in your spending habits to avoid letting credit card debt pile up. Take back control of your finances by learning more about debt relief options and solutions.
Credit card companies frequently offer promotions and incentives to encourage prospective borrowers to open a new line of credit. Often, these promotions include things like a period of no interest. But these promotions don’t last forever – if you don’t pay off your balance before the period is up, you could face a hefty spike in your monthly payments once interest is calculated.
Interest rates for credit cards can be astronomical, averaging between 20 and 30 percent. For some borrowers, the monthly interest charge is even more than the premium. Although interest-free promotions might be the cause of your debt, they can also be the solution.
In fact, moving your debt from one high-interest credit card to one with no interest can save you thousands of dollars in the long run. This is known as a balance transfer, since you are moving the balance of multiple sources of debt into one easy-to-manage payment.
Keep in mind that if you opt for a balance transfer, you may need to make a higher monthly payment if the new loan term is shorter than the original. However, you’ll still end up saving money by paying the debt off more quickly and cutting your interest costs.
It’s always a good idea to compare balance transfer options from multiple credit card companies. Periods of no interest and transfer fees often vary depending on the company. You could potentially save hundreds of dollars by finding a company with long promotional periods and low transfer charges.
Another debt relief option is to take out a low interest personal loan to cover your debt expenses. You’ll need to make monthly payments toward the loan, but the interest rate is usually significantly less than credit card companies will charge.
Are you juggling multiple sources of credit card debt? Consolidating your debt into one easy payment can save you time, money and headaches.