A Simple Way to Banish Credit Card Interest

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The following is a guest post written by Colin Robertson from Credit Card Balance Transfer Offers, a blog focused on the money-saving and debt-destroying aspects of balance transfers. Enjoy!

A Simple Way to Banish Credit Card Interest

Back in my early 20’s, I racked up a decent amount of credit card debt.  It’s a pretty typical story – a young guy gets a job, starts going out to fancy dinners and expensive bars, buys pricey work clothes, trendy ties, and before you know it, spends beyond a paycheck he thought was much larger. Turns out taxes and insurance took a larger bite than expected.

It Starts Off Small

Not long after, finance charges were being applied to my credit card accounts each month.  At first, I thought, “It’s only $20-$30, no big deal. I get to keep spending and buy all the things I want, so it’s worth it.” But, after a while, I realized the money was really starting to add up, especially as my balances grew.  And, it appeared as if I was in a nasty downward spiral, where my balances kept growing and the fees got larger.

In hindsight, it makes perfect sense.  Credit card issuers charge you a certain APR, which when multiplied by your balance, gives you your annual interest charges. The bad news is most credit cards come with an astronomical APR – something in the high teens to 20% range to be sure, so it wasn’t long before I caught wind and decided to take action.

I Ignored the Offers

I had always seen balance transfer offers in those mailers the credit card companies send out, but I never gave much thought to them.  Usually, I just tore them up and cursed at the sight of them.

Finally, one day I decided to read the fine print, and found that these 0% balance transfer credit cards could actually save me some serious cash.  Still, I thought there must be a catch.  Why would they agree to take my credit card debt and move the interest rate from 20.99% to 0%? 

It just didn’t make sense.  Then, I realized these credit card companies had a plan as well.  They wanted me to transfer my balance so they could eventually charge me interest, essentially gambling (using their fancy algorithms) that I would eventually carry a balance with them, even after the promotional 0% APR period was up.

Then, I Beat the Credit Card Issuers

But I was wise to it, and made a payment plan to avoid that.  I wanted to beat them at their own game.  So, I took one of them up on their offer for one of their low interest credit cards and transferred $3,000 in credit card debt. 

My APR was set at 0% for 12 months, so I knew I had to move quickly to avoid finance charges.  Using simple math, I divided my balance by 12 and started making monthly payments of $250.  At the same time, I stopped spending excessively to make room in my budget.

And before long, I was out of credit card debt and no longer had to stress about those monthly finance charges.  It was a great feeling, and since then, I’ve never paid credit card interest. 

Why?  First, because I changed my spending habits as a result of learning about how credit card interest works.  And secondly, because I knew if my debt ever did get out of hand, there was another credit card issuer willing to give me promotional 0% APR for at least 12 months.

Nowadays, credit card issuers have become even more aggressive, offering 0% APR on balance transfers for up to 21 months, which would allow the most debt-riddled individual to get out of a serious jam.

So, if you’re paying credit card interest, take a look at your spending habits and balance transfers.  They’re not as complicated as they may appear, and they could save you some real money with very little time and effort.

How about you all? Have you ever used 0% balance transfer deals to reduce your credit card debt? If so, how did the process shake out? Were there any hidden fees?

If not, what has kept you away from using them? If you’ve never had credit card debt, would you use balance transfers?

Share your experiences by commenting below!

Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.

First off, great post Colin! I really enjoy these first-hand experience posts about debt reduction. It puts a very human feel to reading a blog, and I like that!

  • @ Spending excessively in your first job out of college – 
    • Colin brings up a very prevalent issue that I have seen all-too-often with highly educated early 20’s graduates with whom I was acquainted at my old job. 
    • It’s definitely understandable how it would happen: you go to college for 4 years busting your tail to get your engineering degree (or equivalent). You’re most likely strapped for cash and having to cut as many corners as you can on your apartment, meals, car, etc. 
    • Then, SHA-BAM!! You land an engineering job where right out of college you are earning $60,000 – $80,000 per year. You have no children and no family to take care of. You’re living the high life, and the money is plentiful! Sure, maybe you have accumulated some student debt in your undergraduate days, but the interest rate for that is low, and you have no trouble affording it!
    • Because of your new-found healthy cash-flow situation, it’s easy to be tempted to start taking out loans to buy furniture, cars, $10,000 wedding rings, or even a new house.
    • However, by simply attempting to maintain some of the same lifestyle you had in your college days, you can really save a lot of money and get ahead in life. 
    • In my first job out of college, I was able to save about 60% of the money I made. This really enabled me to get ahead, especially since the money was being invested during the recession of 2008-early 2009.
  • @ Key to reducing credit card debt = changing your habits –
    • I couldn’t agree more with Colin’s point about it being crucial that he not only 1) get the balance transfer to enable him to get ahead on his payments, but 2) that he also make sure to change the habits that landed him with credit card debt in the first place. 
    • Even with the most favorable 0% balance transfer terms, you’re not going to be able to pay off your debt if you keep on spending excessively.
  • @ Using balance transfers to get rid of credit card debt –
    • First, I want to add one word of caution for anyone thinking of using a balance transfer. Please make sure to watch for hidden fees. In other words, do what Colin did here and read the fine print! This will ensure that no surprises come your way as you commit to a balance transfer deal.
    • Second, I am still trying to decide if I would recommend using balance transfers or not when people are paying down credit card debt. Indeed, there seems to be a split in the advice of personal finance experts on this topic as well.
    • On one hand, I cannot argue that using a balance transfer will allow you to pay less interest in the short term. However, in the long run, after the 0% promo deal is up, what will the interest rate be? Will it revert to being 20%? 30%? Will the whole ordeal of finding a 0% balance transfer deal just take away the person’s focus of saving and paying off their debt?
    • Because of these reservations I have, in my Helping a Friend Get Out of Credit Card Debt Series, I currently just recommended that my friend focus on 1) calling their credit cards to lower their interest rates and then 2) creating their Debt Free Action Payoff Plan.

***Photo courtesy of http://www.flickr.com/photos/alancleaver/4105755730/lightbox/


  1. Using credit cards falls under two things: it can be advantageous and dangerous at the same time. Without proper management, you will for sure have a life full of debts. So it would be better for you to know and understand its proper usage so as to prevent you from having so much debt in the end.
    My recent post – DATING ADVICE FOR MEN

    • Thanks for sharing Kenny. The way that I prevent getting in to trouble with credit cards is simple, but difficult at the same time – I simply don't spend more than I have in my bank account in cash each month and always pay off my balance on time.
      My recent post Tips on Saving Money for the Future

  2. I only carried a balance on my credit card a couple of times over the years, and even then was able to get back out within a month or two. I never had to resort to using balance transfer offers but it could be an effective strategy, though I've heard that they are not nearly as available as they used to be back in the day.

  3. Just to expand on Jacob's comment about hidden fees – sometimes credit card companies charge a fee to transfer your balance. The most common amount I've seen is the greater of 3% of your balance transfer or $50. In essence, you may just be prepaying a portion of interest with this fee. So make sure to do your math and see if the transfer is really a better deal before making your decision.
    My recent post Day 274 – Mid-Month Debt Payoff Report

  4. Hi Colin! That's a good story of how you were able to make a credit card work for you. I agree with Kenny. We can enjoy many benefits if we just learn to be more responsible with our spending habits and also do our best to pay the balance in full each month. Reading the fine print before committing to anything can save us a lot of headaches and we also need to check and scrutinize the bills we receive for any hidden fees or unusual activities.
    Thanks for sharing, Jacob and for the additional input.
    My recent post I Need a Credit Card

  5. I must admit I was one of those early 20 year old's who was guilty of this. I got myself into credit card debt and it wasn't easy to get out of. I did do the balance transfer thing a few times but in the end I got a loan from the bank and paid that off. I drastically changed my habits too and I am proud to say that I am now debt free, have savings, and am well on my way to retiring early.
    My recent post 3 Important Lessons in Living Frugally, But Not Too Frugally

    • Thanks for sharing your experiences Miss T! I have a couple of follow up questions…

      1) What did you find yourself spending a lot on in your early 20's that made you get in to debt?

      2) How did balance transfer work for you in the end? What made you decide ultimately to just get a loan from a bank?
      My recent post Tips on Saving Money for the Future

  6. I only carried a balance on my credit card a couple of times over the years, and even then was able to get back out within a month or two. I never had to resort to using balance transfer offers but it could be an effective strategy, though I've heard that they are not nearly as available as they used to be back in the day.
    My recent post Cheap Green Home Improvements

    • Thanks for sharing Money Beagle! When you did carry a balance on your card, were you surprised at how fast the interest added up? Or, was it not all that bad?
      My recent post Tips on Saving Money for the Future

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