Paying off credit card debt is one of the most challenging tasks in all of personal finance. And each month cardholders chip away at their principal while continuing to accumulate more interest charges.
But while most cardholders simply pay the minimum payment, or try to pay whatever they can before the due date, there are several strategies that they can use to minimize interest payments.
First, cardholders should work on the timing of their payments. Credit cards calculate interest payments based on the average daily balance, so that interest is accumulating each day. Therefore, cardholders will save money on interest when they make their payments as early as possible.
Rather than waiting for the due date, payments should be made as soon as the cardholder receives their money from their paycheck or other income source. Cardholders can even make multiple payments each month at their earliest opportunity. In addition, payments made electronically will be received and credited faster than those sent through the postal service.
But the most important thing that a cardholder can do is to get a card with a 0% APR balance transfer offer, or if new expenses can’t be repaid, a card that offers 0% financing offer on new purchases and balance transfers. By doing so, the cardholder will avoid interest altogether on new purchases and/or any balance transferred. The savings will last during the pre-defined promotional financing period.
How to find the best promotional financing offers
Cardholders with debt should look for the longest terms for 0% APR financing on new purchases and balance transfers. For example, the Citi Simplicity and Citi Diamond Preferred cards both currently offer 18 months of interest free financing on new purchases and balance transfers, with a 3% balance transfer fee. Another top card is Chase Slate, which offers 15 months of 0% APR financing on new purchases and balance transfers, but with no balance transfer fee. In fact, Slate is the only card currently offered with a 0% APR balance transfer offer and no balance transfer fee.
Once cardholders are approved for a new card with a 0% APR balance transfer offer, they can immediately execute the balance transfer over the phone. Remember, each day that goes by results in additional interest being accumulated on the cardholders existing balances.
By understanding all of the ways to reduce credit card interest payments, cardholders can structure their finances to save money while paying off their debt.