A Credit Card That Can Help With Your Debt

There’s no denying that most debt is bad, and that credit card issuers don’t have an incentive to help you get out of it. After all, they make a lot of their money from the fees and interest rates they charge borrowers.

But once in a while, a card will offer an attractive sign up bonus that can actually help. This is the case with the Barclaycard Ring Mastercard.

It has 0% apr for 15 months, and 0% on balance transfers made within the first 45 days of account opening. But it shines with no balance transfer fees.

Most cards offering a 0% introductory rate charge around 3% for balance transfers. It may not sound like much, especially when compared with a high interest rate currently imposed on the debt, but the best way out of debt is to have it cost you as little as possible.

There are a few cautions to make this work, though (assuming, of course, that you’re approved for the card in the first place).

  1. Do not charge anything new to this card. The goal is to reduce your debt, not add to it.
  2. Don’t transfer more than you will pay off in about 14 months. That way, you won’t have a balance when the introductory offer ends and the regular interest rate kicks in (currently over 13%).
  3. Do not, under any circumstances, forget to pay at least the minimum each month before the due date.

As an example, transferring $1400 from a card charging (a modest) 12% and paying $100 per month will pay it off 2 months faster and save you over $100 in interest. Savings are even more dramatic on debts with higher interest rates.

 

As an aside, I’m not getting anything for recommending this card. I just know that when I started digging my way out of debt, offers like these helped me gain traction on the slippery slope of high interest rates.

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Mindset Mindset Mindset

I’ve always had an interest in personal finance, but lately, a few things happened that brought it even more to the forefront:

  • I downloaded a copy of University of Berkshire Hathaway while it was free on Amazon
  • Berkshire Hathaway had their annual shareholder meeting, so it was all over headline news
  • A friend asked me about the debt management company I used to escape my debt

I was originally going to do a post about one effect that growing up poor can have on your future financial perspective. But as I thought about it, I realized I was describing the symptoms of “poverty mentality” (Stephen Covey, author of The 7 Habits of Highly Effective People, refers to it as a “scarcity mentality”).

Whatever you name it, it boils down to a defeatist attitude. The thinking that no matter what you do, “The System”, or “The Man” is designed to keep you down. Some people blame Republicans, some the Democrats, many look accusingly at large corporations…

The truth is, in spite of all the policies and laws in place, in spite of ANY circumstance, YOU determine your own level of success or failure.

Years ago, I saw a sign that used two men holding donuts to depict the poverty mindset. One looked at how large the hole was, so his donut appeared like a thin string around it, while the other focused on the donut itself. His was big and fat around a tiny middle.

Viewing life through a lens of lack—the money you don’t have, the opportunities only the rich are afforded, the time it would take to make any changes—ensures that you will stay in your nice, safe, current situation.

But there is NO reason you have to be stuck where you are today. No reason you can’t get out of debt or move toward your own definition of success. It all starts with where you focus your attention.

An interesting example of this mental shift in action is in the movie Back to the Future (1985). In the beginning, Marty’s brother (Dave) is wearing a fast food company uniform. At the end, he’s in a suit, saying, “Marty, I always wear a suit to the office.” All things being equal, a bit of self-confidence set the whole family on a completely different path.

In coming posts, I’ll be sharing how I got out of debt, as well as my thoughts about what I learn while determining what to do with money next.