Paying off Credit Cards with 0% Interest

Hey Guys!

Here recently I've had multiple conversations around paying off credit card debt.

And today, I want to share some of the same tips I've been giving these folks with each of you.

But first, let me ask you a question.

The question is, how do you as a 401k or 403b participant become a 401k Superhero to your future self?

That is the question and these videos will give you the answers.

I’m Jonathon Schultheiss and welcome to the becoming a 401k superhero videos.

This week I've met with several different employees as we were doing employee education meetings.

We would go over how to get enrolled into the plan and how to set up their accounts and so forth but then I always make it a point to just ask them about any debt they may have.

I do that because at retirement, the less debt you have the less money you need to pull out of your investments and therefore the longer your money will last in retirement.

So one of these folks I was talking to told me they had just over $3,000 in credit card debt and they were paying 29% interest and they told me they felt like they just couldn't get it paid off.

I said let me show you why.

I pulled out my calculator and I did the math.

29% interest on $3,000 means they are paying $870 a year on just interest.

That's $72.50 every single month that just goes to interest.

So if this person was only paying $100 a month then that means that only $27.50 of that $100 would actually be paying down the principal.

At that rate there is no way you would be able to get out of debt anytime soon.

Here's what I did and I want to share this with you.

We went to a website called nerdwallet.com where we searched 0% interest credit cards.

It then pulls up a whole list of available 0% interest credit cards.

We looked through the cards and found a credit card with 0% interest for 21 months.

So if we say this person owes $3,000 in credit card debt and we divide the amount by 21 months that comes up to $142 a month and they would be completely debt free before the 0% interest ran out.

Now think about this.

This person goes from only $27.50 being applied to principal to now being able to put their whole payment towards it and have it paid off.

Now when we look at these 0% interest credit cards you got to read the fine print.

And for this particular credit card there is a balance transfer fee and it works like this: it's either $5 or 3% of the amount transferred, which ever is greater for the first 120 days from when you open the account.

So this person has 120 days to get everything moved over so it can be paid off and they have to pay 3% so lets do that math on this.

3% of $3,000 is $90

It's going to cost a one time fee of $90 instead of $870 every single year.

Hands down, that's the best way to go.

So now this person can be completely debt free in just 21 months.

The other thing we did too, is we looked and said okay, what if something else comes up and maybe this person can't get everything paid off in the 21 months then they will be back to 13-25% interest.

But instead of $3,000 lets say this person has paid it down to $500.

Now you're only paying 25% on $500 verses the 29% they were paying on $3,000.

This is definitely the way to go.

You see, when you pay off credit cards and you get yourself ready for retirement- that's one of the best ways for you to become a 401k superhero to your future self.

If I can help you with any of these things or if you have any questions then click on the link above and let's schedule a time for me and you to talk today.