It seems simple, right? To pay off balance transfer cards—or any debt— you spend less than you earn and send the leftover money to the lender. That’s true, but there’s a lot more to it. You have to get your mind right and set up systems that support your debt-payoff goals.
I’ve successfully and unsuccessfully used balance transfer cards to pay off debt quicker. I don’t recommend them unless you’re disciplined and follow these tips. I nearly maxed out the latest balance transfer card and was determined to pay it off before the 0% interest rate expired in December 2018. In this post, I’ll break down each step I took to pay off a balance transfer card 5 months early.
- August 2017: I got approved for the Barclaycard Ring Mastercard, a 0% interest balance transfer card with a $0 balance transfer fee. Yep! I transferred my debts for free! I transferred two credit card balances and a grad school loan onto the balance transfer card (Bank of America Visa $2,194 + Old Navy Visa $1,943.87 + Grad School Loan $2,809.87 = Total $6,947.74).
- December 2017: I paid off the two credit card balances. Those interest rates were 19.40% and 25.24%, respectively.
- July 2018: I paid off the balance transfer card in full.
- December 2018: The date in which interest would have started accruing on the remaining balance if it were not paid in full.
10 Steps to Paying Off a Balance Transfer Card Effectively
1. Get into the debt-crushing mindset. The journey to debt freedom begins in your head and your heart. I got mad at my credit cards and their outrageous interest rates. Then I grew determined to pay off the debt well before the new interest rate could kick in. Each month, I placed debt payoff at the top of my goals list. I even nicknamed the payoff goal “Operation: Bye-Bye Barclay” and nicknamed the card “Pay off by June 2018” on my online account. I taught on the side so I could live off of the extra income and assign my salary to debt repayment.
Getting into this mindset before making the decision to apply for the balance transfer card was crucial. You can’t half-ass it. Who wants to have yet another card on their credit report and end up paying interest when the whole point of the card was to elude interest? Balance transfer cards can be great tools if you use them correctly. But just like any tool, I had to have the knowledge to wield it effectively, which leads to number 2.
2. Read all of the fine print. Call the company if you have to. You can use this worksheet I filled out to get clear on the 8 things to consider when getting a balance transfer card.
3. Do not use the card. You cannot get out of debt by increasing your debt. When you get the balance transfer card, activate it and put it away, freeze it or cut it up. My card stayed in its original envelope throughout the entire promotional period.
4. Set a debt payoff deadline a few months earlier than the actual deadline. Remember when you had class at 8:00 a.m., so you set your watch 10 minutes fast to make sure you’d get there on time. This is the same principle. If you have 15 months of 0% interest, for example, aim to pay off the balance transfer card in 12 months. Why? Life happens. You want to leave room for error. You might have to pause your debt snowball for a change in priorities, job loss, etc. If you push yourself hard in the beginning, you might just have enough motivation—and money—to pull through in the end. I planned to pay off my card 6 months earlier than the lender’s deadline. I changed priorities but still paid off the card a few weeks later than I planned—still well ahead of the lender’s deadline.
5. Break down large goals into small goals. The total balance of nearly $7,000 looked daunting. Reducing a chunk at a time was helpful. I felt most angry at the credit card debts so I set a clear goal to take care of those first. Subgoal: Pay off $1,000 each month over 4 months. After I completed that subgoal from September December to December 2017, I aimed to get rid of the remaining balance by June 30, 2018.
6. Make debt payoff a priority in your budget. I view paying off debt as “paying yourself first.” In the end, all of that money will return to me. Therefore, I made sure to list the minimum payments for all of my debts in the monthly budget first. Then, I added my debt payoff goal for that month. The leftover money would be used for eating out and everything else. You have to plan ahead and take the debt snowball money off the top. It must be at the top of your priority list.
7. Visualize your goals. Visuals such as debt-free charts and checklists create a powerful, self-motivation to follow through. They also clearly show if you are on track to achieve success. When I decided to pay off $1,000 over 4 months. I made a simple graphic with 4 empty boxes. Each month that I paid $1,000, I checked off a box. Each month, I became more and more determined to leave no boxes unchecked.
8. Tell the world about your goals. Well, I told the few thousand followers on Instagram at the time. And a couple of close friends. Accountability is key! Knowing that others will be waiting for an update each month kept me focused and motivated.
9. Get inspired by others. Staying immersed in the debt-free community on Instagram, reading blogs and listening to podcast fed my brain positive energy. Seeing debt-free stories every day and every week showed me that I can do it. Connecting with like-minded people is powerful. Don’t go it alone.
10. Readjust when plans go array. My second subgoal was to pay off the last part of the balance by June 30, 2018. I followed steps 3 through 6. But life happened. I enrolled in a teacher certification course in December 2017 to make myself eligible for better jobs. That sent the balance transfer card money to tuition and exam fees. So I started paying the minimum again for a few months and then made two huge payments in June or July to pay the card in full—just 2 weeks shy of the original goal. When things get off track, don’t give up. Do what you have to do until you can do what you want to do.