Master This Essential Strategy for Managing Your Monthly Credit Card Balance Efficiently
Sometimes, you need to rely on credit, but that doesn’t mean you have to pay high interest rates. Many people have credit card debt; in fact, by the third quarter of 2023, Americans had a total of $1.08 trillion in credit card balances, according to the Federal Reserve Bank of New York.
If you carry a credit card balance every month, one of the best things you can do is reduce the amount you’re paying in interest. Most people pay 20% interest or more on their balance each month, but there’s a way to cut that rate to as low as 0.99% APR.
One of the easiest ways to lower your interest rate is to open a balance-transfer credit card. For instance, the Navy Federal Credit Union (NFCU) Platinum Card offers low rates and no balance transfer fees. When you open an account, you’ll get 0.99% APR for the first year and pay no balance-transfer fee. This can be a huge relief and help you pay down your balance much faster. Credit card interest can add up quickly, often causing a large portion of your monthly payment to go toward interest instead of paying off your balance. This can make a seemingly small credit card balance take years to pay off. A balance-transfer credit card offers a break by providing lower interest payments.
You might continue paying the same amount you were with your previous credit card, which could help you pay off your balance faster.
The NFCU Platinum card offers a 0.99% APR on balance transfers for 12 months with no balance transfer fees. After that, you’ll pay a variable APR of 11.24% to 18%. These rates are much lower than those offered by many other issuers, which can have variable APRs of 18.74% to 29.74% and a 3% standard balance-transfer fee. The NFCU Platinum card also has no annual fees, no foreign-transaction fees, and no cash-advance fees, meaning you’ll have more money to put toward paying down your balance.
When you carry a credit card balance every month, your interest rate can make the difference between making progress and staying stuck. Shopping around for a balance-transfer credit card with low rates can significantly impact your finances. For example, if you have a $5,000 credit card balance with a 30% APR, it will take 22 months to pay off your debt with $300 monthly payments, and you’ll accumulate $1,362 in interest. However, you could pay off that same $5,000 balance at a 12% interest rate in 19 months with $300 monthly payments, accumulating only $440 in interest.
Check your latest credit card statement to find out your current APR and how much of your monthly payment is going toward interest. If you don’t like what you see, now is the time to find a balance-transfer card like the NFCU Platinum Card. It’s easy to apply and see how much you could save in interest.