A $2,000 balance on your Credit Card – how did that happen? (Oh yes, Holiday gifts, new tires, school clothes for the kids…) Thankfully the minimum payment is only $38. You can afford that!
Before you make the payment, consider this: If you make only the requested payments on that debt, your toddler will be entering high school before the balance is zero. Here’s how it works: Most creditors require one to three percent of an outstanding balance as the monthly minimum payment. For $2,000, the average would be $40. As the balance declines, so does the requested payment. With an annual percentage rate of 15.07 (the current average according to Creditcards.com), it would take almost 17.5 years to repay, with an ultimate payout of a whopping $4,547.64.
You can avoid wasting precious time and money by disregarding the requested payment on your statement and using the “consistent payment method” instead. The process is simple and efficient:
1. Determine a realistic and fixed amount you can pay each month
2. Declare a moratorium on using the card until the balance is repaid
3. Pay more when you can – but never go under your preset amount
How much can this method possibly save you? Plenty. If you can manage $80 every month, you will repay the debt in 7.5 years, cutting off 10 years, with a final payout of $2,821.52. Increase the payment to $100 and the payoff time plummets to 6 years, and $2,617.87. Expedite the process even further by lowering the interest rate with a credit card balance transfer.
Be aware of your goals when choosing a new card. A 0% balance transfer credit card may sound like the perfect fit, but it may not be what you’re looking for if you don’t plan to pay off the balance within that 0% interest period. Instead, a card with a lower annual interest rate may cost you the least.
Fixed For Life Balance Transfer
Altra Federal Credit Union offers a 5.9% APR fixed-for-life balance transfer with no balance transfer fees through March 31, 2017. Your balance transfer rate will remain fixed for the life of the balance transfer as long as your account remains in good standing. Altra Visa Credit cards are loaded with advantages. With our Visa Signature card, you’ll enjoy Travel Rewards and a Cash-Back Rewards option plus a host of additional Visa Signature Services, such as access to tickets for popular sporting events, unique dining experiences, and movie ticket discounts. You’ll also be able to take advantage of Visa’s exclusive, complimentary 24-hour concierge service as well as shopping savings and special offers from your favorite retailers. Get full details at www.altra.org.
Article sponsored by Altra Federal Credit Union, serving 93,000+ members in all 50 states and around the globe. This information is intended solely to provide guidance and is not financial advice.
“More Than the Minimum: How to Pay off Your Credit Card Debt Faster.” Balance PRO N.p., n.d. Web. 26 Jan. 2017.