Why now is the right time to transfer your credit card balance
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According to the Federal Reserve, the average annual credit card percentage is 14.58%, a terrible number in itself that can easily get close to 20% and more. For those who don’t pay off their bank statements every month, such interest rates can quickly wipe out debt that seems seemingly impossible to pay off, especially when playing financial whack-a-mole with multiple cards at the same time.
If you want to clean up your finances, you should apply for a different credit card. This may seem counter-intuitive – the last thing you need is more credit card debt, after all. But you are not applying for more purchasing power. You are applying for a card specifically designed to transfer high-yield revolving debt, which is possibly the quickest, easiest route to financial freedom.
A balance transfer can provide protection throughout 2021 and beyond
Balance Transfer Cards offer special introductory tariffs, the best with zero percent interest for 12, 18 or in some cases even 20 months. When you receive the card, you will be given instructions on how to move the high-interest debt you are stuck with onto your new, new interest-free card. Then you can set the minimum monthly payments for automatic payment and forget about it until the special term has expired. With most of 2021 still ahead of you, it means you can breathe more freely for the rest of the year and beyond while the world hopes to return to normal.
Find out: How to Consolidate Credit Card Debt
You can keep the wolves at bay a lot easier
Aside from late payments, missed payments, or defaults, paying only the minimum balance monthly is the worst strategy for dealing with credit card debt. You rarely cut capital just to diminish even those modest profits as new financing costs pile up and your debts drag on forever. However, none of this matters if you are not paying interest. When you transfer your balance, you will only be able to pay the minimum, knowing that every dollar cuts your principal debt, which will soon get smaller and smaller instead of getting bigger and bigger.
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You can buy some air to breathe
Now that your debts have been safely parked for a year or more, you have some leeway to relax, regroup yourself, and decide how to get the money that will best serve you to all of the high-interest debt that you have just put on hold. Starting in February, you can plan your entire fiscal year – perhaps this money will go towards additional payments for student loans, for the prepayment of your car or for building an emergency fund. No matter what you choose, it doesn’t count towards your card provider’s profit column.
You can kick the can out on the street later if you have to
When your introductory price expires, you will be charged high-yield financing fees. Unless you have damaged your balance in the meantime, it will have passed more than enough time to be sure to apply for a different balance transfer card to start repeating the process with whatever is left on your tab.
Did you know already: The 6 Best Store Credit Cards That Are Worth a Place in Your Wallet
You can improve your credit
By opening another credit card, you increase your available balance and thus reduce your credit utilization rate, which, along with punctual payments and derogatory notes, is the strongest factor influencing your creditworthiness. You may get a small temporary drop initially due to the hard credit that comes with every application, but it won’t be much and it won’t take long. After that, you’ll have lower monthly bills, more cash, less high-interest debt, more available credit, higher credit, and a brand new plastic rectangle in your wallet.
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Last updated: May 21, 2021