Shed Those Holiday Credit Card Pounds
Published January 7th, 2008 in Credit Help and Tips.
So the holidays are finally over, and Valentine’s Day is already starring you in the face.
Unfortunately, many of us are still grappling with credit card debt accrued during the holiday season after buying countless gifts for family and friends.
That can lead to hefty finance charges, especially if you let it ride and don’t pay it all at once.
But if you do decide to tackle the whole thing, you could leave yourself overextended for other bills such as rent, utilities, and other recurring items.
If you find yourself in a similar situation, sit down and consider how you can carve into your debt and still keep enough money lying around for your core financial needs.
If you don’t want to, or simply cannot pay off all the debt, think about transferring the debt to a 0% APR credit card.
Many of these credit cards offer 0% financing for 12 months, which will allow you to make minimum payments each month without accruing interest.
Sure you may take on a balance transfer fee, which typically ranges from $5 to $75, but if you carry that debt month after month, you’ll be paying a lot more in the long run.
The great thing about 0% financing is that each and every payment goes to the principal balance, so you can map out a plan to pay off the sum with monthly payments that fit your budget.
Say you’ve got a balance of $1,200 that you can’t pay off. Instead of keeping it on the original card and being subject to finance charges, move it to a 0% credit card for 12 months.
If you pay just $100 each month, you’ll be debt free on that card within a year and you’ll pay nothing above the original amount aside from a balance transfer fee of $36 (assuming its 3%).
And think about it, that 3% is almost guaranteed to be less than the actual APR on the credit card, which probably ranges between 15-30%.
If your credit score keeps you from a 0% APR offer, talk to your current credit card issuers about transferring the debt to a low-interest rate credit card.
And if that fails, simply ask for a lower interest rate. It doesn’t hurt to ask, and if successful, it could save you a lot of money.
