Do you have significant credit card debt? If you’re like most Americans, you do. Even if you seem to have your payments under control, do you know how much you’re really paying in interest? Over the life of your credit card debt, interest can accrue at incredible rates and influence your savings more than you could ever imagine. Read on to learn how to stop high interest from impacting your savings and affecting your wealth.
With the average interest rate on credit cards now at about 15% (and it’s on the rise), it is no wonder that so many people are falling behind on payments and finding themselves drowning in a sea of debt. One reason this debt has gotten so bad in America (one in three households now carries credit card debt of more than $10,000), is a lack of education concerning interest rates and how high interest can impact savings.
For instance, a credit card holder with a debt of $10,000 and a 15% interest rate who pays a minimum payment of $300 per month toward the debt will take almost 4 years to pay off the total amount, and will pay $3,200 in interest on the original debt of $10,000.
A credit card holder with a debt of $7,000 and a 21% interest rate who pays a minimum payment of $150 per month toward the debt will take more than 8 years to pay off the total amount, and they will spend a total of $14,550 to pay off the debt – that’s more than twice the original debt of $7,000!
Don’t let high interest take over your life savings! One way to eliminate debt that works for many people is to transfer their balance using a 0% APR balance transfer offer. Balance transfer offers are available from most credit card issuers and many have special introductory rates as low as 0%. What can a 0% balance transfer mean if you carry a high balance?
The credit card holder with a debt of $10,000 and a 15% interest rate, who transfers his balance to a 0% interest rate for one year making that same $300 a month payment, and whose rate then returns to 15%, will have his debt paid off almost 2 years sooner…and will save $2,100 in interest.
The credit card holder with a debt of $7,000 and a 21% interest rate, who transfers his balance to a 0% interest rate for one year making that same $150 a month payment, and whose rate then returns to 21%, will have his debt paid off in 4 and a half years…and will pay $2,900 in interest – a savings of $4,650!
Savings will vary from person to person depending on their balance, interest rate and monthly payments, but in these rough economic times, any savings that you can get from a 0 APR balance transfer is worth taking. Being aware of how much you are really paying in interest and taking advantage of this option for saving money on your interest payments can mean more money directly back to your bottom line, and more overall long term savings.