Credit • Debt • Finances & Money

Got too much credit card debt? Rotate It!

Ok, so if your credit cards were filing cabinets, and each charge was its own folder, would you have 1 cabinet? 5 cabinets? 20 cabinets? How about folders? 1, 10, 100, or more?

I admit it. I have a few cabinets. Right now, all my folders are in one cabinet, but most of them are mighty dusty. I’ve hauled this same debt around with me since college. But do you want to hear something cool? I haven’t paid credit card interest for 5 years (give or take a month or so)! Now, how do I get 0% interest for 5 years? Oh, before we answer that, let me detail the following:

1. I almost never add new credit card debt (ie, I pay cash when I can). When I do, I don’t charge it to the same card that has 0%. Read why later.
2. For the first few years, even though I wasn’t really adding new CC debt, I didn’t manage my finances well (until I got married, that is). I still had other debt.
3. I’d rather spend my money paying off higher interest debt like auto and student loans

So, back to the question at hand. How did I get 0% for 5 years on my CC (Credit Card) debt? Well, I have multiple cards and rotate the balances around when a 0% offer pops up. Now, sometimes I acquire a new card in order to do this, but very rarely (I don’t like having that on my credit report). The trick is this: the longer you wait to use one of your cards, the better the offers get for that card. Say you haven’t used a card for 6 months. Well, you’ll start getting offers for 5.9% APR for balance transfers. The longer you wait, the lower the rate! (hey, that rhymes!). This applies to most cards (at least Chase, MBNA, Citi, and Discover). You just have to be patient.

Unfortunately, though, there are months where none of your cards (I have about 5 cards) offer 0%. I currently have 2 cards at 1.99% and 2 cards at 5.9%. The 5th I use for purchases. I could easily transfer to the 1.99% cards, but I’d be nailed with a transfer fee of about $50-75. You need to time it so that you can perform the least amount of transfers (to get hit with the least fees) to a card with the lowest (if not 0%) APR. I’m getting pretty antsy right now, but I expect I should be getting a 0% offer soon. If you’re interested in finding a 0% balance transfer card, Amazon.com might be a good place to start. Feel free to click on the credit card picture below.

Oh yeah, one more thing. Don’t charge any new purchases to a card that has a low APR balance transfer sitting on it. If you do, any payments you send always go to pay down the lowest APR item. So, you’ll keep incurring finance charges on your purchase amounts (anywhere from 8%-22%, or higher) every month on that purchase amount. That’s why I keep a separate card for purchases and pay it off each month in full.

Now that’s the way to get 0% APR on credit cards for 5 years (mostly)!