Americans have fallen into the debt trap to an extent that our grandparents could never have imagined. We have to have everything, and we have to have it now. As a consequence, many of us are drowning in credit card debt. Here is a possible solution.
The days of low prime rates are over now, and 0 APR credit cards are harder to find. Not impossible, though. Many companies still offer 0 APR credit cards for limited period only so that they can attract new customers. This initial period of up to 12 months can save you buckets of money if you have high interest credit cards.
This is how to you can handle it: First, transfer your balance from your high interest credit card to your new one. This will lower your monthly payments and save you money every month. Second, don?t go shopping yet. Rather, take these savings and pay down the balance on your credit card. Now you?re paying principal instead of interest. Do this for the entire initial period and you?ll be surprised at how much you can pay off your balance.
Third, don?t use your new credit card to spend more money, because when the higher interest rate becomes applicable you could end up with an even higher balance that you had before. Once the 0 APR period ends, you can take advantage of the extra money provided by lower payments, right? Maybe. Since you?ve gotten so used to high credit card payments, why not delay your gratification a step further and continue to make payments at the same amount, thereby paying off the debt faster? In this way your new credit card can be used to motivate you to eliminate your long-term credit card debt. Note that your 0 APR credit card should never be used to spend more ? only to lower your debt. Once the higher interest rate kicks in, your new line of credit is a useless to you as your old one was.
What debt management offers you is freedom ? after all, which would you rather have, peace of mind, or more stuff that you probably don?t need anyway?