move; you can save
hundreds of dollars a
year. But be careful:
You should transfer
a balance only if
you’re committed to
paying off the debt
within an introduc-
tory low-interest-rate window (which typi-
cally lasts 12 to 18 months after the first
billing cycle closes), and to making monthly
payments on time, says Arnold. Otherwise
your rate could skyrocket, possibly ending
up higher than the one you just got rid of.
(Important: You should also avoid making
any purchases with the new card, as some-
times the low interest rate won’t apply to
them). In addition, find out if the issuing
institution charges a balance-transfer fee,
which may be up to about 3 percent of the
total amount transferred. (To calculate how
much this will cost you, go to smartbalance-
transfers.com.)
4. USE A PEER-TO-PEER LENDER
In an ideal world, you would pay off
your credit card in full and be free and
clear. But if you can’t do that, consider
borrowing money to pay off your card from
a peer-to- peer lender, such as the websites
LendingClub.com or Prosper.com. These
secure sites offer loans with fixed interest
rates that can be 20 to 30 percent lower than
most credit cards, meaning you could save
hundreds of dollars in interest on your debt,
says Lynnette Khalfani-Cox, a cofounder
of AskTheMoneyCoach.com, a personal-fi-
nance site. If you
have a job and a good
credit score, you may
qualify to make an
online loan request for
up to about $25,000.
5. IF YOU’RE
REALLY STRAPPED, MAKE TWO
MINIMUM PAYMENTS EACH MONTH
Card issuers typically charge interest
on a daily basis, so the sooner you make
a payment, the faster your average daily
balance is reduced, the fewer dollars in
interest that you ultimately pay. If you’re
on a tight budget, go ahead and pay the
minimum due each month, then try to
make the same payment again two weeks
later. Making twice monthly payments
will more than cut your interest charges
in half. Keep making a payment of the
initial minimum-due amount twice a month
until your debt is paid off. (To keep track,
put a reminder on your phone’s calendar.)
Example: Say you charged $2,000, on a
card with an 18 percent interest rate. If you
make only the minimum monthly payment,
(which is about 2 percent of the balance),
it will take more than 21 years to pay-off
the balance. But if you make an additional
payment of the original amount two weeks
later, you will be debt-free in about three (3)
years.
Robert Rhinesmith is a Registered Invest-
ment Advisor, Applewood Capital Management
Associates, LLC.
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