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- When deciding on a new credit card, consider more than a few factors before making a final decision.
- A balance transfer is still a great tool to use for paying down high interest credit card debt — as long as you leverage one responsibly.
- You don't have to feel shame for enjoying your credit card — tools exist to help get you back on track.
I (reluctantly) applied for my first credit card when I was a sophomore in college, and that card was the Discover It® Chrome student credit card. I didn’t know much about the card, and I was leery of it, to say the least. As the child of a first-generation credit user, I didn’t trust credit cards in general and quickly relegated this student card to a “use mostly never” category.
However, as I got older and began my career in personal finance (covering credit cards, no less), I learned important information that completely transformed my perspective. The more knowledge I gained, the more prepared and excited I was to start searching for my next credit card. This second card application would be the first card I’d fully, comprehensively understand. Instantly, I set my sights on a top travel credit card.
My first travel credit card
For me, the best thing about graduating from college was the newfound freedom. As my friends and I spread to various parts of the country to start jobs, grad school and more, the opportunity to see so many new places seemed endless. So, why not earn travel rewards on all these trips and experiences? Armed with fresh knowledge on credit cards in general — but most specifically on how travel credit cards work — I began shopping around for my first travel credit card.
There were a few things I kept in mind when I was choosing my travel card. I knew I didn’t have any brand loyalty to a specific airline, so a co-branded credit card wasn’t at the top of my list. I also knew that despite extensive travel plans in the near future, realistically, my travels would get less frequent over time. I wanted a card with decent short-term value (an easy sign-up bonus), travel rewards I’d rack up on everyday purchases and no annual fee. At the end of my search, I checked off all of these boxes with the Capital One VentureOne Rewards Credit Card.
I was approved quickly and earned the sign-up bonus with ease, thanks to a quick trip home for the holidays. Over the first few months with the card, I went back to my alma mater a couple of times, visited friends in California and New York City on back-to-back weekends, went to a college friend’s wedding in their hometown and traveled to my own family home more than once.
Needless to say, I racked up a balance of a few thousand dollars rapidly, and I’m among the at least 60 percent of balance-carrying cardholders who’ve held credit card debt for a year or more. Now that my travel frequency has leveled off as expected, I’m trying to pay off this balance as quickly as possible for more than a few reasons.
How I’m planning to pay off my travel card debt
Credit card interest rates continue to hit record highs, and now more than ever is the best time to focus on paying down high-interest credit card debt. Also, as a recent graduate who benefited significantly from the student loan repayment pause, the end of that program has me taking a hard look at my budget. One tool helping consumers like me to pay down high-interest credit card debt is a balance transfer credit card.
This type of credit card allows consumers to transfer high-interest credit card balances from one account to another with 0 percent interest for a set period. You pay a fee for completing a balance transfer — usually 3 percent or 5 percent of the transferred balance. The biggest advantage of a balance transfer card is that it can save you interest by buying you time to create a plan to eliminate as much debt as possible during the intro APR period.
These are a few steps I’m taking as I prepare to do a balance transfer.
1. Pay down as much of the balance on the current card as possible.
When I get around to completing my balance transfer, I want to transfer as little of a balance as possible. The lower the transferred balance, the lower the added balance transfer fee. Also, by transferring less, I’m able to feasibly pay down the balance more quickly — and could get a boost to my credit score by lowering my credit utilization ratio. I plan to pay down as much as possible before making my transfer by paying well above the minimum payment on my travel credit card as often as I can.
2. Establish a repayment game plan.
It’s best to go into balance transfer cards knowing a few key details, like how much time you’ll need to get the balance to zero before the card’s intro APR period ends. Budget how much you want to pay each month toward your debt, and begin setting some of that money aside before starting the transfer. And don’t forget to factor in the card’s balance transfer fee, setting aside funds to pay that added cost as well.
3. Compare balance transfer cards.
After you make your payoff plan, shop around for the best balance transfer card to meet your budget and financial goals. These cards offer varying intro APR period lengths, balance transfer fees and ongoing APRs that you’ll want to be aware of if you end up with a balance after the introductory period ends. Pick a card that fits best with your personal repayment timeline to maximize its value.
The best balance transfer cards I’m considering
Three primary characteristics make up the best balance transfer card for me: the longest available intro APR period, an intro APR period on purchases and no ongoing rewards program. With that in mind, here are a few cards that I’m considering.
The Citi® Diamond Preferred® card boasts one of the longest intro APR offers on balance transfers, with 0 percent APR for 21 months (then 18.24 percent to 28.99 percent variable APR). Your approval odds are best with good to excellent credit — a FICO score of 670 and above — and you’ll be able to focus on repayment without the distraction of trying to earn rewards, because there’s no rewards program. The ongoing APR is also on the lower end compared to the current average credit card interest rate, which is a plus if you plan to carry a balance.
In addition to hitting all of my preferred card traits — a long intro APR on balance transfers, an equally long intro APR on purchases and no rewards structure — the BankAmericard® credit card* comes with the added perk of not charging a penalty APR if you miss a payment. Be aware that, even on a balance transfer card with a 0 percent intro APR, missed payments can still negatively affect your credit. This card will get you a 0 percent intro APR on balance transfers and purchases for 18 billing cycles (then 16.24 percent to 26.24 percent variable APR.)
Like the BankAmericard, the Citi Simplicity® card* checks the boxes while also offering an extra perk. This card won’t charge a late fee if you happen to make a late payment, though you may still get hit with a penalty APR and a ding to your credit score. The card has a 0 percent intro APR on balance transfers for 21 months on transfers made in your first four months of opening your account (then 19.24 percent to 29.99 percent variable).
The bottom line
In my time navigating post-grad life, I’ve learned a lot about my financial goals and the best ways to achieve them. I’m glad I took the leap and applied for my first travel credit card, and I’m glad I used it, too. I’m confident knowing that there are tools designed to help me manage my debt effectively, so I can still live my life the way I want to. The same can be said for you, as long as you play your cards right.
*Information about the BankAmericard® and Citi Simplicity® Card has been collected independently by Bankrate. Card details have not been reviewed or approved by the card issuer.