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Beat debt fast with a balance transfer credit card. See how a new credit card with better terms and a lower rate can help you save more money as you eliminate your debt.

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  • Citi® Diamond Preferred® Card

     

    Rated 5/5 stars by our editorial team

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    4.3/5.0 from 360 Offer Ratings
    Over the Past 60 Days!

    (360) Over the Past 60 Days!
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  • Citi® Double Cash Card – 18 month BT offer

     

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    • 0% for 18 months on Balance Transfers

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  • Citi Rewards+℠ Card

     

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    • 0% for 15 months on purchases and 0% for 15 months on balance transfers

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How your minimum payment is calculated

Your credit card minimum payment is set by the issuer as a percentage of the total balance that you are currently carrying on the card or as 1% of the total balance plus all interest. Issuers also set a fixed amount to a minimum payment, such as $25, which sets a floor for the lowest amount a minimum payment can be.

As you pay your balance down, your minimum payment will drop, but the interest will continue to compound on the existing balance, which is why just paying the minimum payment on a high card balance will take a very long time and can trap you into a seemingly never-ending debt cycle.

If you take a look at your actual monthly statement, there will be an explanation of how long it will actually take to pay off your balance if you only choose to pay the minimum payment, along with an estimated total amount of how much you will end up paying in interest charges.

 

How to avoid paying excessive interest charges

There are four ways to avoid paying excessive interest charges on your current credit card:

  1. Pay the entire balance in full by the due date. This way, you’ll avoid paying any interest.
  2. Pay your credit card bill online as soon as the charge hits your account or multiple times a month.
  3. Create your own repayment plan by dividing your balance up over a set period of time with equal payments that fit within your budget.
  4. Whatever you do, always pay over and above the minimum payment so that more of your payment goes toward your principal.

 

Consider an intro 0% balance transfer card to avoid interest charges

If you have good credit, you may want to consider transferring your high-interest debt to a credit card offering a 0% balance transfer offer for a limited period of time. For example, some balance transfer cards allow you up to a year or more to dedicate your payments entirely to the principal without incurring interest charges. After the promotional period expires, the standard APR will apply to whatever balance remains. If you choose to go this route, stick to a strict repayment plan and avoid racking up new charges on the old or new card or you could find yourself with more debt than you had to begin with.

Some balance transfer cards charge a 3% to 5% balance transfer fee, which is tacked onto the amount of the debt moved to the new card, but know there are plenty of cards that have no balance transfer fees worth checking into.

To find out if applying for a new balance transfer card is right for you, check out CompareCards’ balance transfer calculator.