More Consumers Expected to Pay Off Debt in 2011

February 8, 2011 No Comments »

pay off debt

More consumers are expected to pay off holiday debt this year, according to a recent survey from Credit.com.

The study found that 59.4 percent of respondents aim to pay off their debt in full this year, rather than carry a balance.

That’s up from roughly 45 percent a year ago, signaling a pretty dramatic change, possibly sparked by the ongoing credit crunch.

Another 12.8 percent of consumers plan to pay down their debt, but still carry a balance, while 25.9 percent said they didn’t accrue any holiday debt.

If you happen to fall into the second category, or even the first, consider a credit card balance transfer to avoid costly finance charges.

Assuming you carry debt each month, you’ll be subject to paying interest, which can add up quick and make getting out of debt that much more difficult.

Let’s look at an example:

Holiday credit card debt: $3,000
Current credit card APR: 19.99%
Balance transfer APR: 0% for 12 months
Balance transfer fee: $0 (no fee balance transfer)

In the above scenario, you’d be paying roughly $50 in interest each month, which would certainly make it difficult to pay down your debt, especially if your payments aren’t much larger than $50.

But if you elected to move the balance to a 0% balance transfer credit card, every payment you made during the first 12 months would go toward the principal balance, in other words, the debt.

So you could pay off your debt much faster and avoid pesky finance charges in the process, all for simply completing a balance transfer offer.

Leave A Response