While many that suffer from high levels of credit card debt wish they could race to a resolution, the reality is that for most individuals it is more of a marathon than sprint when it comes to paying off debt.
Credit card companies purposely establish it this way.
They often hook people into enrolling into promotional offers with lower APR rates at first, before jacking up the interest after six months or a year. During the introductory period, people spend freely in the false ambitions that they will pay the debt back before the 0% APR introductory period ends, yet that rarely fails to actually happen and instead millions of Americans drown in debt, getting behind and only able to make their minimum payments.
The Fastest Path to Debt Freedom
Simply sticking to the minimum payments will keep you in decent standing with the creditor and away from the eyes of the law, but it represents an extremely long and unfortunate journey back to debt freedom.
By far the quickest path is to transfer debt from a high interest credit card to another credit card, generally a new one you enroll in that offers an introductory 0% APR interest rate.
Credit card companies leverage an introductory 0% APR rate to get more customers. As previously mentioned, these offers can get people in trouble as they spend, spend, spend at first but then sink behind on payments after the interest kicks in. And the major setback to 0% APR introductory offers is the APR usually skyrockets after the promotional period, approximately 16 to 22 percent depending on the creditor.
However, you can use introductory 0% APR credit cards to to your advantage. Almost all of the major credit card companies enable balance transfers from one credit card to another. They usually do so with a balance transfer fee (though some promotion offers also include 0% balance transfers for a specified time period as well).
Consequently, one can shift their debt from a credit card with a high interest rate to a new card that will not charge a single cent in interest for ideally one year, even 18 to 24 months. While your debt sits in the new card, every single dollar you spend will go to lowering the principal.
It is a distinct advantage and much quicker route to paying off $10,000 or more in credit card debt because unfortunately most of your current monthly credit card payments get vacuumed up by interest, meaning that if you pay $150 per month for a payment, probably only $30 to $50 of the payment is actually paying off principal, the rest only covering interest charges.
We are not lying. If you simply stick to the minimum monthly payments with the current credit card provider (assuming the APR is around 16-20 percent) you are going to spend twice as long paying off the debt compared to transferring the balance to a new card with an introductory 0% APR rate.
The banks don’t want you to know this crucial piece of information because they stand a chance to make a lot more money by having you buried in debt, and consequently outrageous interest rates for years.
Transferring debt to new credit cards with introductory 0% APR interest rates is entirely effective, completely legal and excellent for leveraging debt among creditors.