Balance Transfer Cards Helped Me Pay Off $10,000 in Credit Card Debt in 3 Years
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- A few years out of college, I found myself with $10,000 in credit card debt and needed to pay it off quickly.
- I came across balance transfer credit cards, which gave me an interest-free window to quickly pay off my debt and save money.
- Although I made a few mistakes, I paid off all my debt in 3 years and balance transfers saved me over $3,000 in interest.
When I got my first “big girl” job out of college, I made the typical millennial mistake of thinking that my fairly average salary could afford me anything I wanted, simply because it was not minimum wage.
As a newly certified adult, I assumed it was okay to sign a lease on a house with a big backyard, fill it with nice mid-range furniture, and a whole wardrobe of new clothes. work, and start going to a bottomless brunch every week. base.
A few years later, I was facing about $10,000 in credit card debt. I wanted to quit my job and move, but I knew I couldn’t do it with five figures of credit card debt around my neck, so I started looking for ways to pay off credit card debt fast. Some casual internet research led me to the answer I needed:
How I Chose a Balance Transfer Credit Card
Balance transfer credit cards typically offer an initial APR of 0% for a set period of time, and often no fee for transferring your balance from another card to this card instead. Then you have that introductory period to pay off your balance without it earning interest anymore, which makes the balance transfer card an option for people trying to dig under credit card debt. .
I went with the Chase Slate®
, which offered 0% interest on balance transfers for the first 15 months (17.24% to 25.99% variable APR after). There are balance transfer credit cards with a longer introductory period, but I chose the Chase Slate® because it had a $0 balance transfer fee for the first 60 days, although the fee balance transfer to the card are 5% of the amount transferred, with a minimum of $5.
Perform a Balance Transfer with the Chase Slate® Credit Card
I was lucky enough to be approved for the card and offered a credit limit of $7,000, which would cover most of my debt. My credit score at the time was around 700, probably due to the fact that my debt ratio was still quite low. Plus, I had never missed a monthly payment.
I transferred $7,000 of my debt to my new Chase Slate® for free and left the remaining $3,000 on my credit card credit union, the one with the lowest interest rate.
With 15 months to pay off my balance before my interest rate hits nearly 20%, I calculated that I would need to make monthly payments of at least $467 to pay off the card on time, in addition to paying the minimum each month on my credit union credit card.
I started with monthly payments of $250 on my Chase Slate® and thought I could increase them as I lowered the costs – but never did. So, at the end of my 15 months, I still had a balance of about $3,000 on my Chase Slate®, plus another $2,000 on my credit card.
Fortunately, I was approved for a second balance transfer credit card. This time I went with the Citi Simplicity® Card because he came with the longest introductory period – 21 months (from the date of the first transfer). Unfortunately, I had never had a credit card with Citi before, so they only approved me for a credit limit of $2,700, and I also had to pay a transfer fee. I transferred the $2,700 from my Chase Slate® and let them charge me interest on the remaining $300 before paying it back the following month. My credit card still had a balance of $2,000.
This time I made a commitment to pay the balance on time. I did the math and established the monthly payments for my Citi Simplicity® Card and my Caisse Populaire credit card on automatic payment.
Twenty-one months later, I was officially debt free.
I made mistakes but still saved $3,000
I made a few mistakes, including not sticking to a debt repayment plan and assuming that I would be approved for a second balance transfer card with an adequate credit limit.
That being said, I paid off $10,000 in credit card debt over three years, and only had to pay $81 in balance transfer fees and just over $400 in interest, mostly on my credit card. If I hadn’t done a balance transfer at all, I would have spent over $3,000 in interest charges.
I never closed my balance transfer credit cards because keeping them open with $0 balances helps my credit score, although Chase eventually closed my Chase Slate® due to inactivity. More importantly, my credit score is approaching 800 and I have been debt free since.