Blog

How A Credit Card Balance Transfer Can Help Relieve Your Debt

How A Credit Card Balance Transfer Can Help Relieve Your Debt

If you're feeling overwhelmed by the weight of credit card debt, especially in the aftermath of the holiday season, it's essential to know that effective strategies are available to help you tackle it without the burden of high-interest charges. One method that can provide significant relief is to transfer your existing debt to a balance transfer card that offers a 0% annual percentage rate (APR) for a specific period. This transition can save you substantial money and accelerate your journey toward becoming debt-free.

By taking advantage of a balance transfer card with a 0% APR, you can redirect all your payments towards reducing your principal balance rather than having them split between the principal and interest charges. This allows you to make faster progress in paying off your debt and frees you from the high-interest cycle keeping you in debt.

How Does A Balance Transfer Work?

Let's delve into the potential savings you can achieve by utilizing a balance transfer card. By proactively implementing a repayment plan and staying committed to it, you can potentially save hundreds, if not thousands, of dollars. To illustrate, let's assume you currently have a credit card balance of $5,000 and make monthly payments of $300. If you continue with this approach while dealing with an average APR of 20.74%, it will take you approximately 20 months to pay off your debt, with an additional $949 in interest charges.

However, you can quickly reduce your debt burden by taking advantage of a balance transfer offer, such as Vermont Federal Credit Union's Visa® Platinum Credit Card Offer. Vermont Federal Credit Union is offering Vermonters a 0% APR balance transfer for the first 12 months. Using this type of offer and maintaining the same $300 monthly payment from before would only incur around $173 in interest and fees. This comprises $73 in interest and a one-time 2% balance transfer fee on the original balance. After the introductory period, the APR may vary based on your creditworthiness, but we assumed the average 20.74% APR for this calculation.

By leveraging the benefits of a balance transfer card, you can potentially save approximately $776 and pay off your debt two months faster than your original debt. This substantial amount of savings brings you significant financial relief and empowers you to regain control of your finances.

Understanding the Limitations

0% APR may sound too good to be true, but it's not! When it comes to balance transfers, it's important to note that 0% APR introductory offers do not include new purchases made, only the existing debt you have. For example, if you perform the $5,000 balance transfer and accrue another $2000 in charges after the transfer, the new $2000 in charges will be charged at your standard APR based on your creditworthiness. The primary goal of a balance transfer is to work down the balance you already owe.

Taking control of your financial situation and actively working towards eliminating debt will not only provide you with peace of mind but also pave the way for long-term financial freedom. Don't let high-interest debt hinder your progress and keep you from achieving your goals. Take the time to explore the options available, carefully consider the terms and fees associated with balance transfer cards, and take the necessary steps to pay off your credit card debt efficiently. With careful planning, disciplined payments, and the right strategies, you can successfully achieve your debt-free goal and embark on a path toward building a stronger financial future.

About Vermont Federal Credit Union:

Vermont Federal Credit Union is a $900 million-plus full-service, not-for-profit, cooperative financial institution that has served Vermonters for more than 70 years, with eight locations currently serving over 50,000 members. Members are part of a cooperative, meaning they share ownership in the Credit Union and elect a volunteer board of directors. Vermont Federal Credit Union provides membership to anyone who lives, works, worships, or attends school in Vermont. Vermont Federal Credit Union is committed to supporting its communities and helping Vermonters prosper, no matter where they may be on life's journey. Learn more about Vermont Federal Credit Union.

Stay up to date with all the latest content.

Subscribe to Our Newsletter