Balance Transfer: The Best Way to Pay Off High-Interest Debt

So many of my friends are on the quest to becoming Financially Fit & Fab. I am so proud of everyone.  Last month, I featured MJ’s story of paying off 39k in debt in 21 months.  Since then I have been told that others want to be featured in the future after they become debt-free.  From the snowball method to paying off the debt with the highest interest rate first, people readers don’t know where to start.

One of the questions that I have been asked recently is what is the best way to pay off high-interest debt?

 

The Best Way to Pay Off High-Interest Debt

Balance Transfer

A balance transfer is transferring the balance of a high-interest credit card to a card with a lower interest rate.  This could be an existing card or a new card.  It is a great way to consolidate your credit card payments.  Most importantly you can literally save hundreds or even thousands of dollars in interest by doing a balance transfer.

Important things to consider prior to applying for a balance transfer:

  • Interest rate of the card you plan on transferring the balance
  • Time Frame of reduced or 0% interest
  • Fees associated with balance transfer
  • Credit Score – If you plan on opening a new credit card for a balance transfer, ensure that you have a good credit score.  The worst feeling is applying for a new credit card in order to do a balance transfer only to be denied the credit card.  It can hurt your morale as well as hit your credit report with a hard pull.

Prior to applying for a new credit card to complete a balance transfer, ensure that you have checked your credit report recently.  The best balance transfer credit cards require good to excellent credit scores meaning that your credit score is above 690.

 

Best Balance Transfer Credit Cards

Chase Slate

  • Intro Balance Transfer Offer: Pay no balance transfer fee when you transfer a balance during the first 60 days your account is open.  After the first 60 days, your account is open, the fee for future balance transfers is 5% of the amount transferred with a minimum of $5.
  • Low Introductory Rate: 0% intro APR for 15 months on purchases and balance transfers from account opening.  After that, 13.24%-23.24% variable APR.
  • Monthly FICO Score for Free.
  • No Annual Fee.
  • No Penalty APR: Paying late won’t raise your interest rate (APR).

 

Citi Diamond Preferred Card

  • Balance Transfer Fee: Either $5 of 3% of the amount of each transfer, whichever is greater.
  • 0% Intro APR on purchases and balance transfers for 21 months; after that, the variable APR will be 12.24-22.24%, based on your creditworthiness.
  • No Annual Fee.
  • Special Card Holder Benefits: Citi Private Pass, Citi Identity Theft Solutions, Travel Protection, and Purchase Protection.

 

The AMEX EveryDay Credit Card from American Express

  • Balance Transfer Fee: Either $5 of 3% of the amount of each transfer, whichever is greater.
  • 0% APR on purchases and balance transfers for 12 months; after that, the variable APR will be 13.24-23.24%, based on your creditworthiness.
  • No Annual Fee
  • Earn Points: 10,000 Membership Rewards points after you make $1000 in purchases in the first 3 months.

 

Personal Experience

Personally, I have both the Chase Slate and AMEX EveryDay Cards.  I used the Chase Slate Credit Card to pay off high-interest debt.  I decided to go with the Slate card because of it the 0% interest on balance transfers as well as purchases for the first 15 months!  That would give me a solid 15 months to pay off my debt without racking up hundred and hundred of dollars of additional interest.

In addition, the Slate card didn’t charge a fee for balance transfers requested within the first 60 days.  Since I knew exactly what balance I wanted to transfer over, I applied for the balance transfer when I applied for the card.

Don’t get me wrong, though, the American Express Everyday card is great to earn points.  However, if your main focus is to pay off high-interest debt, you should work on finding the right card for you with the longest period of 0% interest.

 

Final Considerations

Lastly, remember that a balance transfer is not a “free” way to pay off your credit card.  You are just transferring your credit card balance to get a lower or 0% interest rate for a specific period.  It is important to pay off the balance transferred before the introductory period is over.  If the balance transferred is not paid over before the introductory period, you will be stuck paying the interest that you just avoided.

So now you may be thinking, how will I be able to pay off my balance transferred?  Consider a side hustle like starting a blog or one of these 10 methods to make $250 this month.

 

High Interest Debt could literally be costing you hundreds of dollars a month. Kick that high interest to the curb with this strategy.

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What tactics have you used to pay off high-interest debt?  What advice do you have for other?

 

 

Pay off credit card debt only one way.

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