Would you throw twenty dollars into the toilet?
Paying a high interest rate on a credit card is pretty much the same as throwing money away. It is unnecessary. Many of us are not only paying monstrous interest rates on a credit card, we are paying high rates on multiple cards. The low minimum payments due each month enable this and put us under the spell that makes it seem as though we are actually maintaining our personal finances responsibly. The fact of the matter is that we are doing exactly what the creditors want, paying them a hefty salary and maintaining a long-term relationship.
By paying the minimum amount due, you are only paying the interest accumulated each month while the principal balance remains untouched. This translates into a nice monthly payday for the creditors while you nurture a long, long-term relationship by never paying down the principal balance on your cards. This is a deep hole to climb out of, especially when you are maintaining several credit card accounts. The only way out of the mess is to pay off all the cards in full. To do this you really need a strategy and [0 percent credit cards] are one of the best tools to pull it off.
There are two basic types of these credit cards. One offers no interest on purchases, the other offers no interest on balance transfers. Both of these offers have a time limit, usually somewhere in the vicinity of six to eighteen months, after which a normal, other worldly interest rate kicks in. This is why a strategy is a key component to using these cards to their full potential.
The maneuver works like this; you apply for one of these cards then transfer the balance of your highest interest card onto it. Now you simply pay it off and save a ton of money because you are not accumulating any more interest. The trick is to do the math and make sure you pay it all off before the time limit is over.
If you have multiple cards you can work it so that once you have moved your biggest balance onto the zero interest card, you call the creditor of the card whose balance you just transferred, and negotiate a deal of sorts. Tell them that you would like to transfer your next biggest balance over to this now paid in full account, but only if they will drop the interest rate notch or two. More than likely they will comply because they want your money. If this works you do the same thing with the third biggest account, negotiating a lower interest rate and transferring the balance onto the now paid second card. Do this for all your cards. When you are done you should end up with a the last card being free and clear after which you will proceed to cut it up and cancel the account.
Now that you have reduced your overall interest rate you can continue paying the same amount. This amount should be MORE than the minimum due each month because of the reduced rates you have negotiated.
Yes, this will cost you in the short-term. Keeping up payments on the initial 0 percent credit card in order to have it paid off before the eighteen month time period is over, plus paying a tad over the minimum due on the other cards will most likely be a bit of a stretch. The long-term strategy however will save you a lot of money and get you out of the lifetime relationship with the blood sucking credit companies.