What’s the best way to pay down a large credit card balance as quickly as possible? All while paying the least amount of interest and not hurting your credit? Glad you asked.
First, understand that the sooner you pay down the principal, the sooner you erase debt. For example, if you owe $10,000 on a credit card and pay $200 a month, $150 of your payment goes toward paying interest. Only $50 goes toward paying down the $10,000 principal (based on an annual APR of 18%).
At this rate, it would take 94 months to pay off your debt, while costing you a whopping $8,622 in interest! That’s an uphill battle everyone should avoid.
Luckily, credit card companies, competing with one another, actually make it easy for consumers. By simply leveraging their special introductory rate programs, you can be on your way to paying down that 10K in no time.
Find a new credit card offer with a zero percent introductory balance transfer – one of the best deals in personal finance. Many banks offer these cards, which today are the strongest promos and longest zero percent APR intro periods since before the 2008 financial crisis. So, apply for one of these cards. Once you’re approved, immediately transfer all your credit card debt to the new card.
Need help finding an offer? Here’s a list of zero percent APR credit cards (with terms).
Once you’ve transferred your balances, it’s time to capitalize on the interest-free period to really break free of debt. And it’s so simple. Just keep paying the same amount you were paying your old high-interest card, only now to the new no-interest card. Now you’re paying off principal at 100 percent.
Pay attention to the terms because once the introductory period is over (typically 12-18 months) the interest rate could actually be higher than your original card. Use this period to pay down as much of your debt as possible.
Stop getting crushed on interest. And start planning that going-away party for your debt. Move your high-interest balances to a zero percent interest card now.