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It's the cheapest way to pay off credit card debt, and most consumers are missing out.
Credit card debt is one of the most frustrating and difficult types of debt to pay off. Every month, you'll incur interest charges that cut into any progress you've made. And unless you pay much more than the minimum, it could be years before you're debt-free.
Although getting out of credit card debt ultimately depends on your financial habits, there are tools out there that can help you pay it off more quickly and without paying so much interest. One such option is a balance transfer credit card that includes a 0% introductory APR.
Many debtors haven't even tried this method, despite the amount it could save them. But if you have credit card debt, then it should be the first payoff method you consider.
Most consumers don't bother with balance transfers
The National Foundation for Credit Counseling recently released its 2019 Consumer Financial Literacy Survey, and the results weren't promising for those who are carrying credit card debt.
It found that 60% of consumers had credit card debt, but only 8% of consumers had transferred balances to a credit card with a lower interest rate. That means that of all the consumers who had credit card debt, only 13.33% had tried a balance transfer.
Why would so few consumers attempt to get a lower interest rate this way? There are three potential reasons:
They're satisfied with their current interest rate. With the average credit card APR reaching 17.35% as of October 2019, this is unlikely. And even if your cards have lower rates, nothing beats 0%.
They can't qualify for a balance transfer card. Although this may be true for some consumers, the average credit score reached 704 last year, and it's possible to get a balance transfer card with a score of 670 or sometimes less. Even among consumers with credit card debt, many have a high enough credit score for a balance transfer card.
They haven't thought about it. For most consumers, this is the likely reason. Unfortunately, not looking at all your debt payoff options can be costly.
How credit card balance transfers work
There's nothing complicated about a credit card balance transfer. You just apply for a balance transfer card, and then transfer over the balances from your current credit cards. Some cards limit the total amount you can transfer, so make sure to check the card's terms and conditions before you apply. You also can't transfer over an amount that is greater than your credit limit, but you won't know that limit until you're approved for the card.
The most important part of the process is picking a card. To decide which of the many available balance transfer cards is right for you, look at:
The introductory period -- Longer is better, because you want the 0% intro APR to last for long enough to pay off all your credit card debt or as much of it as possible.
Balance transfer fees -- Lower fees will keep your costs down. These are usually anywhere from 0% to 5% of the amount you transfer.
Balance transfer limits -- As mentioned above, some cards cap how much you can transfer. If you your new card's transfer limit will not cover your credit card debt, then you should probably go with a different card.
Once you've picked a card, the next step is to apply. Depending on the card, there may be an option to set up your balance transfers during the application process. If not, you can do so after you're approved, either through your online account or by calling the number on the back of the card.
How much you can save
If you're dealing with thousands in credit card debt, then a balance transfer card can be very valuable. Let's say you have $6,000 in balances, which is about the average credit card debt. Here's a comparison of what you would pay with a balance transfer card against what you will pay if you keep your balances on cards with an average APR.
Payoff Method
Starting Balance
APR
Monthly Payment
Time to Pay Balance
Total Paid
Keeping balances on original cards
$6,000
17.35%
$400
18 months
$6,812
Balance transfer
$6,180 (includes 3% balance transfer fee)
0% for 18 months
$400
15.45 months
$6,180
Data source: Author's calculations.
You save more than $600 this way -- $632, to be exact.
You'll also be out of debt about 2 1/2 months sooner. And because you're consolidating your debt onto one credit card, you're less likely to miss a payment than you would with balances spread across multiple cards.
There's one thing to remember with this method. Don't make the mistake of thinking you can relax just because your credit card debt is interest-free for the time being. Balance transfers are only effective if you use that interest-free period to pay off as much of the principal as you can.
A better way to pay off credit card debt
A balance transfer card won't magically eliminate your credit card debt, but it can help you pay a lot less in the long run. If you haven't tried one yet, it's a route that's well worth your time.
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Lyle is a writer specializing in credit cards, travel rewards programs, and banking. His work has also appeared on MSN Money, USA Today, and Yahoo! Finance.
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By: Dana George |
Updated
- First published on July 25, 2023
Costco has a faithful legion of fans -- otherwise known as members. There are 123 million of them, to be precise. Throughout the years, Costco has added new membership benefits, some less well-known than others. Here are four that members may not realize exist.1. RV parkingWhether you spend part of each year visiting the highways and byways of North America or you're hoping to rent an RV for your next vacation, it's good to know that some Costco locations allow RVs to park overnight in their lots. Free overnight parking can certainly cut down the cost of travel.Consider the convenience. You arrive near closing time, pick up all the items you've already burned through or forgotten to bring, and spend the night in a well-lit lot. Granted, pulling an RV into a (typically) packed Costco lot may not be the easiest thing you've ever done, but once the lot clears out, you may even hear the sound of crickets.Notice we said that some Costcos permit overnight parking for RVs. When a store does not, it's often because local ordinances don't allow it. However, with so many Costcos scattered across the country, you should have options.The easiest way to determine which Costcos allow overnight RV parking is to check this Costco locations finder. Once you see one near where you plan to stay, call that store and ask to speak with the manager. Once you have them on the line, ask about their overnight policy. If the store does permit overnight parking, ask for permission to stay. According to the Camper Report, Costco has rules for campers, so you may want to ask where you can get a copy of those.2. Home, auto, renters, and specialty insuranceIn the back of our minds, most of us realize that Costco offers insurance, but we're not sure of the details. Partnering with CONNECT, powered by American Family, Costco members receive discounted rates on many of their insurance needs. Beyond the initial discount, CONNECT allows you to add more. For example, you may qualify for a safe driving, multi-policy, or student discount.And if you're an Executive member, CONNECT sweetens the pot even more by providing you with benefits like roadside and lockout assistance.At a time when many people are unhappy with the insurance industry, 9 out of 10 members who sign up for CONNECT coverage go on to renew their policy with the insurer.3. Home and business suppliesWhile it may occur to you to pick up envelopes and printer paper at Costco, have you ever taken advantage of the low prices on items like checks, ink stamps, and address labels? Many of the supplies you need to take care of business -- at home or in the office -- are available for up to 50% off.Executive members enjoy an even deeper discount.4. Floral deliveryOnce you factor in delivery costs, sending a lovely bouquet of flowers to someone can cost a small fortune. That's not the case at Costco. Costco's online floral department offers everything from anniversary and graduation bouquets to bulk flowers. And here's where the real savings come in: Delivery is free. The price you see listed on the site, plus tax, is the price you pay.Few things are more frustrating than typing your credit card number into a florist's site, only to learn that delivery costs nearly doubled your purchase price.As Costco layers on new perks, keeping track of them may become even more difficult. It's a good idea to check periodically to see if there are any you're not taking full advantage of.
By: Emma Newbery |
Updated
- First published on Aug. 7, 2023
Are SNAP benefits enough?A monthly payment of $973 for a household of four equates to around $8 per person per day. While SNAP benefits aren't designed to cover everything, it isn't easy to feed a family on around $2.66 per person per meal. Indeed, research from the Urban Institute showed that the maximum benefits often don't cover a family's food costs. "Amid inflation, SNAP benefits did not cover the cost of a meal in 99 percent of counties in 2022," said the report.The new benefit amount -- a monthly increase of $34 for a household of four -- is roughly in line with cost-of-living increases measured by the Bureau of Labor Statistics (BLS). Its latest Consumer Price Index figures show that the cost of all items in June, 2023 was up 3% over the year before. However, inflation does not impact all aspects of life equally.The BLS data also shows that food at home increased by 5.7% year over year. The new SNAP benefits do not match this. Hypothetically, a 5.7% increase in benefits for a family of four would mean a new monthly payment of $992, rather than the planned $973.In addition, this year brought the end of the pandemic-era emergency food benefits throughout the country. According to CBPP calculations, this meant the average person received about $90 a month less in SNAP benefits. Even factoring in the increased SNAP benefit amount, many households have seen a significant drop in their food benefit amount, and the revised 2024 payments will do little to close this gap.How to make your SNAP benefits go furtherIt can take time and energy to provide healthy food for your family on a strict budget. The challenge is that in a busy household, time and energy are also limited resources. Even so, if you can carve out some time to plan your grocery-shopping trip, it can make a big difference.Here are some ways you might stretch your SNAP benefits a little:Use cash back apps and coupons: Look for cash back apps that work in stores that take your EBT card. You'll usually need to download an app and then scan your receipt after you've been to the store. Pay attention to coupons, whether in store or online as these can often carry hefty discounts.Always shop with a list: Planning your food shopping is one of the best ways to reduce costs. Even more so if you use a cash back app or coupons. Check what offers are available on items you normally buy before you go shopping. Mark the items that qualify for rewards or discounts on your list, so you don't miss them when you're shopping.Look for double up programs: There are Double Up Food Bucks or other programs in various states that essentially give you two for one on all produce at participating farmers markets and stores. It's a great way to get more fruit and vegetables for your SNAP dollars.Buy in bulk and batch cook: It isn't always easy to find the extra cash for bulk buying when you're eking out every cent. However, if you can manage it, you may be able to save both money and time. You might, for example, batch cook a stew and freeze portions for future meals.Unfortunately, food insecurity still impacts many American households. If you don't have enough money to feed your family this month, look for additional help. Find out what food pantries and soup kitchens are operating in your area on which days, and whether you'll need to present any documents. Call United Way at 211 for information about assistance programs in your area.
By: Christy Bieber |
Updated
- First published on Sept. 5, 2023
Incomes vary widely across the United States, with some people making many times the amount that others earn. If you've ever wondered how your personal finances stack up, and what "class" your income officially puts you in, here's what you need to know.What income do you need to be upper, middle, or lower class?Based on 2021 data, here's what you would need to earn in order to be in each class:Lower class: This is defined as the bottom 20% of earners. Those in the lower class have an income at or below $28,007.Lower middle class: This is defined as individuals in the 20th to 40th percentile of household income. Earnings among this group are between $28,008 and $55,000Middle class: The middle class is officially those whose earnings put them in the 40th to 60th percentile of household income. The income range is $55,001 to $89,744.Upper middle class: Anyone with earnings in the 60th to 80th percentile would be considered upper middle class. Those in the upper middle class have incomes between $89,745 and $149,131.Upper class: Finally, the upper class is the top 20% of earners and they have incomes of $149,132 or higher.Take a look at these numbers and see where you fall based on your own earnings. And remember, this is a snapshot in time -- your earnings can change throughout your life, and so can your class designation.Will your success be determined by your income and class?It's probably not a surprise that those in the upper classes or in the upper middle class do have a higher net worth than those in the lower class or the lower middle class. But the disparity is greater than you might think. While the median net worth of those with incomes of $149,132 or higher is $805,400, the median net worth of those in the lower class is just $12,000.Your income impacts how easy it is for you to build wealth. If you make more money, it is easier to save it and invest it in a brokerage account where it can work for you. If you make less money, then you may struggle even to cover the necessities out of your checking account, much less to buy valuable assets that help you grow richer over time.But that doesn't mean people who don't make a lot of money can't be a financial success. A lot depends on what you do with the money you actually have, including how much you spend and how much you save.There are plenty of people who make over $100,000 a year who live paycheck to paycheck, and plenty of people with incomes that put them squarely in the lower or lower middle class who have diligently saved and grown quite wealthy over many years.Here's how you can improve your standingDon't be discouraged if you aren't in the class you hope to be. For one thing, you have opportunities to increase your income by taking the following steps:Learning new job skills: You could obtain a certification, take part in a management training program at work, or take some classes to develop skills that may help you get promoted (such as computer training courses or public speaking classes), depending on your industry.Take on a side hustle: The average side hustle brings in $483 per month, which is a good amount of extra money that could make a meaningful difference in your income.Work some extra hours: If your company allows you to work overtime, take advantage of it, as many people are paid time and a half for overtime hours.Negotiate your salary: According to Pew Research, when workers negotiated for higher pay, 28% said they received the extra money they asked for and 38% indicated they were given more than originally offered but less than their ask. Whether you are getting a new job or staying at your current job but feel you're underpaid, it doesn't hurt to make a request for more money -- especially if you can find salary data to back up the fact that others in your industry are paid more.And even if your earnings never put you in the top 20% of earners, you can still have a rich life and end up with the financial security you deserve -- especially if you prioritize saving as much as you can for as long as you can.
By: Maurie Backman |
Updated
- First published on Sept. 13, 2023
At some point in 2022, I discovered Aldi and began shopping there weekly. I found that I was able to save money on my grocery bill by purchasing certain produce items there. And since I happen to have an Aldi adjacent to my local Costco, it wasn't particularly out of my way.But over the past few months, I've become less enamored with Aldi. Here's why.1. The selection is just too limitedAldi -- at least near me -- is a minimally stocked grocery store. The shelves aren't loaded the way they are at my nearby ShopRite and Stop & Shop.To be fair, this was the case when I first started shopping there. But because there's just not a lot of selection, I'm generally limited to only buying a few items when I pop into Aldi.Not so long ago, I was running into Aldi for some fruit, which I usually buy there, and I needed to grab shredded cheddar cheese. Normally, I get that at Costco, but I didn't want to run next door to Costco and wait in a line for cheese alone. Unfortunately, though, Aldi didn't have the cheese I needed, so I had to make an extra stop anyway.2. The inventory is too inconsistentNot only is there a limited selection of food items I can buy at Aldi, but sometimes, I can't even find the five or six things I'm looking for. Aldi was once my go-to source for avocados, since it's an expensive purchase and Aldi tends to sell them for less than Costco (at least in my area). But the last few times I stopped at Aldi, avocados weren't in stock.And that's happened to me with other things, too. Over the past several months, I've struggled to find everything from cucumbers to strawberries at Aldi as well.3. What the store saves me on groceries, I lose via lost working hoursShopping at Aldi still has the potential to save me a little money on groceries. At a time when supermarket prices are up 3.6% on an annual basis, that helps.The problem, however, is that even though Aldi is right near Costco in my neighborhood, thereby allowing me to combine those trips, it still takes time to visit an extra supermarket. I have to find parking, wait in a checkout line, and spend time searching the shelves.While it's nice to save $2 here and $3 there, the reality is that a stop at Aldi might cost me 20 or more minutes of work -- especially when I don't manage to find the things I need. And losing out on that work time often means forgoing more than $2 or $3 of income. So from a time perspective, it's just not worth it.Shopping at Aldi could make sense for a lot of people. If you're someone with flexibility in your schedule and grocery list, and you're not so picky about the brands you bring home, then it could pay to spend the time visiting Aldi, even if you don't always manage to find all the things you need. But I've reached the point where shopping at Aldi makes less and less sense for me, so I'll most likely stop going there unless it's a one-off basis.
By: Brittney Myers |
Updated
- First published on Sept. 20, 2023
How can you tell when autumn is almost here? It's not the leaves on the ground, or the chill in the air. No, the first sign of fall is the deluge of pumpkin spice everything hitting the store shelves.Even if you're not crazy for spicy squash, there are a lot of interesting items that show up this time of year in all our favorite stores. Sam's Club, for example, has already started rolling out some of its seasonal selections. Take a look at some of the limited-time fall items out now.1. Member's Mark seasonal soupsIf there's any dish that epitomizes fall flavors, it has to be soup. Sipping soup on a crisp fall evening is about as close to autumn nirvana as you can get (without literally turning into a pumpkin). These seasonal soups offer some of that fall feeling without putting your budget into hibernation:Autumn Squash Soup (32 oz. tub, 2 pk.) | $9.98 ($0.16/oz)Member's Mark Black Beans, Corn and Spicy Chorizo Soup (24 ounce tub, 2 pk.) | $10.48 ($0.22/oz)2. Pumpkin spice coffeesWhole bean, ground, K-cup -- doesn't matter how you like your pumpkin spice coffee, Sam's Club has an option for you this fall. You can find a variety of brands and styles, all at the great prices you'd expect to see:Boyer's Whole Bean Coffee, Pumpkin Spice (36 oz.) | $18.88 ($0.52/oz)Community Coffee Ground Coffee, Spiced Pumpkin Pecan Pie (32 oz.) | $14.42 ($0.45/oz)Copper Moon Coffee Single Serve Cups, Harvest Pack (36 ct.) | $12.98 ($0.36/ea)Dunkin' Donuts Medium Roast K-Cups, Pumpkin Spice (54 ct.) | $29.98 ($0.56/ea)Starbucks Limited Edition K-Cup Coffee Pods, Pumpkin Spice (64 ct.) | $29.98 ($0.47/ea)3. Fall decorFew things will get you in that leaves-on-the-ground mood quite like some seasonal fall decor. Sam's Club has a surprising variety of harvest-inspired decorations, from front porch pumpkins strung with twinkly lights to a set of resin turkeys for your tablescape. (There's also a good array of indoor and outdoor Halloween decorations, too.)Member's Mark Harvest Door Mat (various styles) | $9.98Member's Mark Halloween Ceramic Candy Bowl (various styles) | $19.98Member's Mark Harvest Wreath (various styles) | $34.98 to $49.98Member's Mark Harvest Pumpkin Set (various colors) | $54.984. Oktoberfest-inspired snacksIt doesn't have as much hype in the U.S. as Thanksgiving -- or even Pumpkin Spice Season -- but lots of folks love to raise their tankard for Oktoberfest. These snacks both look like they'd be good washed down with a pint:Member's Mark Beer Cheese Flavored Popcorn (14 oz.) | $4.98 ($0.36/oz)Member's Mark Oktoberfest Mini Pretzel Franks (18 oz.) | $11.98 ($0.67/oz)5. Halloween candyHalloween candy holds a special appeal for many of us, regardless of our age. What's really cool, though, is that when you're an adult, you can just, like, buy the stuff -- no costume required. Of course, as an adult, you also need to be financially responsible. So, buy your candy from Sam's Club in bulk. You know, for the savings.Reese's Halloween Pumpkins Candy Bulk Bag (39.8 oz., 65 Pieces) | $11.98 ($0.18/ea)Hershey Halloween Candy Bulk Variety Bag (53.7 oz., 105 pcs) | $18.98 ($0.18/ea)Sweetarts Halloween Ghostly Goodies Mix (59.86 oz., 175 ct.) | $19.98 ($0.11/ea)A lot more fall to comeLet's be honest: It's not really autumn yet. And it certainly wasn't autumn when all this pumpkin nonsense started weeks ago. There's still so much actual autumn to come!The point? Pace yourself -- and your bank account.After a long, hot summer, it can be so tempting to embrace the fall feeling, even if it does come a few weeks early. Part of that, for many folks, is drowning their summer sorrows in pumpkin spice. But all that mood-altering goodness isn't free (or even cheap). No, it can add up faster than you think.Before you start running up your credit cards on seasonal goodies, take the time to figure out which ones will bring you the most joy. Focus on one or two items that will really make you feel like fall is on the way, and leave the rest for other pumpkin lovers to enjoy.
