Transfer-Paydown Debt Option

using budgeting to paydown debt balances

The transfer - paydown debt option involves group payoff over a period of time. Use this option if you have minimal debt that can be paid off within 1-3 years under your current financial budgeting position.

Below are four (4) quick summary features of home equity lines:

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group-payoff option

Card Paydown: 6-18 Months

Use this option if you have minimal credit card debt that can be paid off in 6-18 months. This option will give you the best credit rating protection.

Start by listing your cards:
list all of your credit cards that have a debt balance. Note the card that is charging the highest interest rate — this is the credit card balance that you will pay off first.

you can download our excel worksheet to list your credit card debt

Estimate your repayment schedule:
use the calculator at right to schedule an amount each month that you can allocate to pay down your high interest-rate credit card. Include in your budget the amount you will need to make minimum payments on all other cards.

Download our "Debt Payoff" worksheet to run your numbers on your desktop

Continue Payoff:
once you pay down your high interest-rate credit card, find the next highest interest-rate card and schedule a new repayment plan.

Repeat these steps for each card — paying down the highest interest-rate card first, and on down to the lowest interest-rate card.

group-payoff option

Use the "Debt Payment" Calculator
to estimate the amount you need per month to payoff your debt over a given period of time.

— enter the best interest rate you can receive
— enter the number of months to repay
— press "calculate" to estimate payment

Use the "Debt Affordability" Calculator
to estimate the amount paid off with a budgeted fixed amount over a given period of time.

— enter the best interest rate you can receive
— enter the amount you would like to pay
— press "calculate" to estimate payoff amount

group-payoff option

Card Paydown: 12-36 Months

This may be an ideal option if you have significant credit card debt that can be paid off within a short period (12-36 months) and if you maintain a good-to-better credit rating.

Find transfer balance programs:
if you have a good credit rating, card issuers will solicit you with attractive credit card consolidation (transfer balance) programs. You may also contact your current credit card issuer about transferring and consolidating other credit card debt.

Inform them that you are shopping to consolidate all or part of your credit card debt under one card — if your credit rating is good, they will want to keep you as a customer.

Find the transfer program that offers a super low interest rate at transfer terms of 6 or more months. Anything less than 6 months is not worth the trouble. Also avoid programs that charge a transfer fee. The fee will wipe away your low-interest savings. And make sure you read the fine print.

List your cards:
list all of your credit cards that have a debt balance. Note the cards that are charging the highest interest rate — this is the credit card balance that you will transfer first.

you can download our excel worksheet to list your credit card debt

Payoff your cards:
take the transfer program that offers the best terms — lowest rate, longest term, and zero transfer fees. Use the program's transfer checks to payoff those credit cards listed that have the highest interest rate charges. If your total credit card debt exceeds the transfer program's credit limit, you may need to use a second or third balance transfer program.

Schedule your pay down amount:
schedule a payoff amount using the calculator that significantly reduces your consolidated amount during the transfer period.

Download our "Debt Payoff" worksheet to run your numbers on your desktop

Maintain terms:
since most transfer programs offer card consolidation terms of 6-12 or more months — significantly lesser time than what you may need to payoff your card debt — you may need to play the transfer game when one program ends and another begins.

Keep note of other transfer balance offers that come in the mail — hold on to those offers that carry attractive terms. Be careful not to jump to another transfer program within short periods. Every time you sign up for a transfer program, an inquiry is made to your credit report. You want to limit credit inquiries to "one" inquiry every "six or more" months.

group-payoff option

Use the "Debt Payment" Calculator
to estimate the amount you need per month to payoff your debt over a given period of time.

— enter the best interest rate you can receive
— enter the number of months to repay
— press "calculate" to estimate payment

Use the "Debt Affordability" Calculator
to estimate the amount paid off with a budgeted fixed amount over a given period of time.

— enter the best interest rate you can receive
— enter the amount you would like to pay
— press "calculate" to estimate payoff amount

group-payoff option

Important Notes

If your budgeted monthly payment does not payoff your credit card debt with 12-36 months, you may need to consider a debt consolidation plan.

Tuck the credit card that you are paying down or transferring. Do not use the credit card for any credit card purchases. You want to avoid interest being charged on everyday purchases and/or racking up more credit card debt.

Try to lower your other living costs:
as you pay down your credit card, review our section on lowering your monthly bills in housing, transportation, living, recreation, and more. Your monthly cost savings can be used to pay down your credit card debt faster.

group-payoff option

Personal Loan Payoff

For personal loan debt such as retailer loans, unsecured loans, and other consumer loans, view our debt payoff module in our debt management module.

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