Credit card Q&A: “How to pay off credit card debt?”
There are several ways to pay off credit card debt, but perhaps the best method is to transfer existing balances to low interest credit cards, or even better, a 0% APR credit card.
By doing so, you’ll be able to lower the APR tied to the balance(s), which will result in fewer finance charges.
Let’s look at an example:
Current credit card debt: $5,000
Current credit card APR: 19.99%
Monthly finance charges: $83.30
(How to calculate credit card interest.)
Instead of paying nearly $100 a month in finance charges, you can ask your credit card issuer(s) to lower your APR.
Essentially, you’ll threaten to move the debt to another card issuer if they don’t play ball. This is one solution, but probably won’t result in anything more than slightly lower APR, not 0% APR.
It may make sense to transfer the balances to a 0% APR balance transfer credit card instead, that way you’ll pay nothing in the way of interest during the promotional period.
And many credit card issuers are offering 0% APR for between 15 and 18 months, plenty of time to pay off the credit card debt and get back on your feet.
The only downside to a balance transfer is the associated fee (unless you can find a no fee balance transfer), but it still beats paying interest every month.
Read more: Which credit card to pay off first?
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Tags: Card Debt, Credit Card, Credit Card Debt, Debt
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