Benchmark Federal Credit Union Shows How to Take Back Control of Credit Card Debt

By

Benchmark

By Rebecca K. Worthington

Did you know the average credit card interest rate is about 17 percent? What’s even more surprising is that many credit card users don’t know their current rates.

With the high interest rates that credit card companies and financial institutions charge, it’s easy for credit card debt to get out of control. Especially when new customers are offered high credit limits. Here’s some insight on how to regain control.

What is Credit Card Debt Consolidation?

Credit card debt consolidation is taking all your high-interest credit card debt and transferring it to a new credit card with a lower rate. This is often called a balance transfer, and many financial institutions offer balance transfer credit cards. Balance transfer credit cards will usually include a low- or no-interest intro period. When consolidating your debt, it’s important to make sure that your new interest rate is lower than your current rate. If not, you’re wasting time and money.

Why Credit Card Debt Consolidation?

Consolidating your credit card debt at a lower rate can save you money on interest. Let’s say you maxed out your credit card debt at $5,000 at the average interest rate of 17 percent. Even if you stopped using the card and paid $200 monthly, it would take you 32 months to pay off the card and you’d spend about $1,215.00 in total interest.

However, if you take advantage of a balance transfer credit card offer, you can pay off the debt a couple of months faster and save more than $1,000 in interest. Let’s use Benchmark’s low FIXED rate VISA credit card as an example.

Our fixed rates are as low as 8.9 percent APR with a 12 month, 0 percent interest intro period.* A 2 percent transfer fee* brings the total debt to $5,100. Make $200 monthly payments to this debt during the intro period, and you’ll be able to pay debt down to $2,700 without any interest. Continue making $200 monthly payments after the intro period expires at a standard rate as low as 8.9 percent, and you’ll pay off all debt in 15 months and only pay about $155 in interest.

What to Look for in Balance Transfer Credit Cards

  • Low- or no-interest intro period. Like in the example above, taking advantage of paying down debt at low- or no-interest rates will make a big difference in the overall amount of interest spent.
  • Secure a lower interest rate. Transferring credit card debt only makes sense if you can secure a rate lower than your current interest rate. Be sure to know what the new card’s standard interest rate is (what the rate becomes after any low- or no-interest intro period).
  • Make sure the rate is fixed. If not, what you thought was a good move, may end up hurting you in the long run as interest rates adjust. While climbing out of debt, you want the predictability that comes along with fixed rates.

For more information on Benchmark’s Balance Transfer Credit Cards, click here.

*APR = Annual Percentage Rate. Rates subject to change & based on an individual’s credit history. 0% Introductory Rate is valid for purchases & balance transfers from other institutions within first 90 days from card opening. The 0% rate will be in effect for 12 months from first qualifying transaction within the first 90 day period & after the 12 month period, the rate on all unpaid balances will convert to the rate member qualified for at card opening. A 2% balance transfer fee applies to all balances transferred during the first 90 day promotion period.

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Rebecca Worthington is Vice President of Marketing with Benchmark Federal Credit Union, which has branches in Phoenixville and downtown West Chester. Celebrating more than 75 years of service, Benchmark FCU is the only federal credit union to exclusively serve Chester County. 610-429-1600; BenchmarkFCU.org.

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