7 Best Tools for Reducing Credit Card Debt
As America’s slight economic hiccup (read: the Great Recession) comes to a close, for many, its effects are still being felt on a daily basis. Many people who were on top of their bills are now finding themselves in credit card debt, while those who already had debt are now deeper than ever. Although getting out of debt is easier said than done, the following tools will help greatly alleviate credit card debt and help those in need get back on their feet.
BillShrink helps people find a better credit card with lower interest rates. We can help you make a personalized comparison of what’s out there so that you can make the best decision for your financial needs. People can also switch cards on the spot by applying for the one that best suits their needs on the site. 2. Payoff.com
Payoff.com turns paying off debt into a game. Seriously. You can earn badges, “Sur-prizes”, and valuable information about reducing your debt each time you log in.
“Payoff helps people take more ownership of their finances, engaging them in a more culturally relevant and rewarding approach to money unlike anything in the marketplace today,” says Scott Saunders, CEO and founder of Payoff.
And according to the site, your personal data is perfectly safe: “Payoff protects your information with the best military-grade 256-bit data encryption, 128-bit SSL encryption and ongoing security optimization. No financial transactions are actually generated at Payoff; your financial accounts on Payoff are read-only to ensure your security.”
Having control of one’s money is often the gateway towards spending it. For many people, the source of their debt is a lack of discipline. However, by using the automatic transfer feature on your bank’s website, you can guarantee that your bills get paid before you do. By setting up auto transfers, bill payments or deductions, those in debt can take away their option to spend more money on stupid things, while also ensuring that the stupid things they already bought are paid for in full. Sometimes, credit cards will offer a special, deferred interest rate for either new or long-time customers. In exchange for transferring all existing debt to their account, you can enjoy anywhere from 12-24 months of 0% interest while you get your finances in order. Although this can be a slippery slope, it should help most people who are usually in good standing to get back on their feet again.
How to Get a Free Balance Transfer Credit Card
Ack in the day, you could find a no fee 0% balance transfer credit card without much effort. And just recently, Discover offered a no interest deal for 12 months with no balance transfer fee. That offer has now expired, and all zero interest balance transfers today charge a fee, which generally ranges from 3% to 5%. But if you are willing to put in a little effort, you can get a free balance transfer credit card. In fact you can find a card that will actually pay you to transfer a high interest balance onto their zero percent card.
Turn 0% on Purchases into a Free Balance TransferThe first step is to find a credit card that offers 0% on purchases . With these offers, you can use the card for everyday purchases and pay no interest on your balance during the introductory period (which is typically 6 to 15 months). And unlike transferring a balance, there is no fee for using these cards to make purchases.
So let’s look at an example. We’ll assume you owe $10,000 on a high interest credit card. If you transferred that balance to a card with a 5% transfer fee, you’d increase your debt by $500 to $10,500. Depending on the length of the offer, this still may be better than paying interest, but we can do better.
Instead of a transfer, start using the 0% credit card for everyday purchases. These would include groceries, gas, prescriptions, clothes, and other things you would need to buy anyway. And then take the money you would have spent on these items and pay down your high interest card. Depending on your debt level and how much you spend each month, this process may take a couple of months. But otherwise the result is identical to a balance transfer, but without hundreds of dollars in fees.
How to Get Paid for the TransferNow let’s talk about how you can actually get paid to transfer a balance. There are several credit cards available that not only offer 0% on purchases, but also cash back rewards when you use the card. And some of the top cards even offer cash bonuses. Here’s a list of cards to consider:
Citi Dividend Platinum Select : No interest on purchases for 15 months, $100 cash back after $500 in purchases within the first 3 months of account opening, and up to 5% cash back.Are 0% Balance Transfer Credit Cards for Life Possible?
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