You’ve got a balance on a high interest credit card and it’s costing you big—in dollars and peace of mind. How you got there and how you can avoid getting there again, is a topic for another post (here’s one to check out). For now, let’s focus on getting out from under.
Step 1: Face the facts. Do you know how much it’s costing you to carry a balance on this card? Or do you just live with a vague, “this has got to be bad” pit in your stomach? Some companies have a section on their statement that tells you exactly what you’re paying in interest and how long it would take to pay off your current balance if you only make your minimum payment.
Step 2: Investigate a balance transfer. Ever gotten an offer inviting you to transfer your outstanding balance to a new card at an amazing low rate? It could save you money, but do your homework first.
Here are a few things to be aware of:
- A balance transfer doesn’t mean you’ve really paid off your outstanding balance. It just means you’re switching it to a new company at a lower rate. This should save you money, but might not when you consider the other items on this list.
- You might have to pay a fee to transfer the balance. Summit lets you transfer without a fee, but that’s not true for all cards.
- You might be paying more in interest than you realize. If you’re making partial payments, and portions of your balance are at different interest rates, you probably don’t have any control over which part of your balance you’re paying off. Don’t assume you’re paying down the part of your balance that’s at the highest interest rate first—find out!
Need help finding the credit card that’s right for you? Check out these tips from Summit.
Step 3: Use automatic payments to eliminate your balance. Don’t depend on good intentions to cut your balance: plan for it! Figure out how much you can afford to pay off each month and set up automatic payments. Making that payment may require some sacrifices, but you’re going to feel a whole lot better when do.
Step 4: Set your payment as a goal in Money Minder. Money Minder is a great way to monitor and reinforce your good financial habits.
You’re ready to make that balance disappear and Summit is here to help!