The credit card statement lies open on the kitchen table, next to your reading glasses and a cup of coffee.
You run your finger down the page to the line that says “Interest Charge.” It’s a lot. Then you find the balance still due. It barely moved.
You paid on time. You paid what they asked. The balance barely moved.
Where Your Payment Really Goes
Here is an example. Say you owe $6,500 on a card that charges 23% APR.
Your minimum payment due on that statement would be about $190. Because many card companies set the minimum at 1% of the balance plus that month’s interest.
If you send only the minimum, about $125 of it is used to pay the interest. Only about $65 touches what you actually owe.
That is about two out of every three dollars going to interest. Gone before your balance gets its turn.
You make the payment, but a big piece of it doesn’t knock your debt down.
You Did Nothing Wrong
Nobody explained that when you opened the card. It just shows up on the statement, one month at a time.
You kept your word. You paid on time.
The trouble is how card interest works. It gets added every month, and a big piece of each payment goes to the interest first.
What It Costs You
Keep sending that $190 a month on the example card. Over the next 21 months, about $2,300 of those payments goes to interest. And after all 21 payments, you would still owe about $4,800.
That $2,300 is a lot of Christmas gifts. It is a new set of tires before the first snow. It is the Saturday breakfast at the diner you keep putting off “until the card is paid down.”
How a Balance Transfer Changes the Math
A balance transfer moves what you owe from a high-interest card to a new card with a 0% intro rate. And you can get that intro rate for as long as 21 months.
While the 0% runs, no interest is added to the balance you moved. So your whole payment goes toward what you owe, as long as you make at least the minimum payment on time.
One card gives you 0% intro APR for 21 months from account opening on both purchases and qualifying balance transfers. There is no annual fee.
Here is the same example on this card. You move the $6,500 balance. The 5% transfer fee is $325, which brings the total to $6,825.
Send the same $190 a month, and every dollar of it goes to the balance. After 21 payments, you would owe about $2,835. That is close to $2,000 less than you would still owe on the old card.
It is the same $190 a month on both cards. What changes is where the money goes.
What People Say When the Interest Stops
Here is what a few people wrote online about 0% balance transfers in general.
One retiree wrote:
“When I retired, I was carrying some hefty credit card balances… kept it there at 0% APR for 20 of the 21 allowable months… saved $1,700 in interest by using the balance transfer.”
Another forum member wrote that they were
“happy to not be paying 24% interest any more. 6 months later, and the card will be paid off next Friday…”
Before You Decide
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The annual fee is $0.
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The balance transfer fee is 5% (minimum $5). On the example, that is $325, paid once when you move the balance.
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To get the intro rate, balance transfers must be made within 120 days of opening the account.
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After the intro period ends, the rate goes to 17.74%, 24.24%, or 28.49% variable, based on your credit.
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No interest is added to the balance you moved while the 0% runs, as long as you make at least the minimum payment on time. Whatever is left when it ends moves to the regular rate. On the example, sending $190 a month leaves about $2,835. Sending $325 a month clears it by the 21st month.
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You generally can’t move a balance between two cards from the same bank. The balance has to come from a different lender.
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You don’t have to give up your old card. Your old account stays open unless you choose to close it.
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Approval is not guaranteed. This card is built for people with good to excellent credit.
What Happens After You Click
1. You read the full rates and terms at FinanceBuzz.
2. If it looks right, you apply on the bank’s own secure website.
3. If you are approved, you transfer the balance from a card at a different lender within 120 days of opening the account.
4. While the 0% runs, your payments go to the balance you moved.
Let Your Next Payment Go Further
The 21 months start when your account opens. Every month you wait, the old card adds about another $125 in interest on the example balance.
Picture that statement on the kitchen table 21 months from now. On the example, sending $190 a month, the balance line reads close to $2,000 lower than it would on the old card. Send $325 a month, and it reads zero.
See the full terms for this 0% balance transfer card at FinanceBuzz »
You paid on time. You did your part.
Now more of every payment can go where you meant it to go.
(Note: Thank you for supporting businesses like the one presenting a sponsored message in this article and ordering through the included links, which benefits WLTReport. We appreciate your support and I truly hope this can help make your life better! MAKE AMERICA GREAT AGAIN!)
This is a Guest Post from our friends over at WLTReport. View the original article here.
