If you’re in debt and struggling to figure a way out, you are not alone. According to a Northwest Mutual Planning & Progress study from 2018, the average debt per American is up to $38,000 (excluding mortgage debt). Two in every ten people also allocate 50% to 100% of their income to debt repayment, which is a recipe for disaster.
More than one in ten (13%) of those who responded to the Northwestern Mutual study also believe they’ll be in debt for the rest of their lives. This just goes to show how prevalent consumer debt really is, and how hopeless people can feel when they’re in the thick of it.
Introducing the Discover it® Balance Transfer
While working with a credit counselor on a debt repayment plan can help you regain control over your spending, another option can help you out of debt without any outside help. Applying for a balance transfer credit card that offers 0% APR for a limited time can help you escape high interest rates and get out of debt faster.
One of the most popular balance transfer offers available today is the Discover it® Balance Transfer.
How to Use the Discover it® Balance Transfer to Get Out of Debt
While the Discover it® Balance Transfer does offer rewards for each dollar you spend, that’s totally beside the point. The real benefit of the Discover it® Balance Transfer is the fact that it lets you avoid paying interest on your balance for more than a year. If you sign up for this card for the purpose of getting out of debt, you should only be using it to get out of debt and not for purchases at all.
Consider what a big difference this card could make in your monthly budget and your debt payoff plan. For a moment, imagine that you have $5,000 in credit card debt with the average credit card APR of 17%. If you make a minimum payment of just $100 each month, it would take you 88 months to pay off your balance completely — and that’s only if you stopped using your card. During that time, you would also fork over $3,759 in interest payments.
Now imagine that you signed up for the Discover it® Balance Transfer and transferred your balances to get 0% APR. The first detail to be aware of is the fact that you would be required to pay an upfront balance transfer fee equal to 3% of your balance. That brings your initial balance up to $5,150.
With your balance transferred to the Discover it® Balance Transfer, you could pay down $1,800 in debt over 18 months if you kept up with the same $100 monthly payment you were making before. Without any interest charges added to your bill each month, each dollar you paid toward your credit card would go directly toward reducing how much you owe.
If you were somehow able to bump up your monthly payment to $300 per month, on the other hand, you could pay off your entire $5,150 debt over 17 months with 0% APR and end the process entirely debt-free.
Other Reasons to Get the Discover it® Balance Transfer
While the main benefit of the Discover it® Balance Transfer is the way it can help you save big on interest and pay down debt faster, there are other perks to be aware of. First off, the Discover it® Balance Transfer offers a free copy of your FICO score on your monthly statement each month. This makes it easy to track your credit health and any score improvements you might experience as you pay down debt.
The Discover it® Balance Transfer also offers a Freeze It® feature that allows you to freeze your account any time you don’t want to make any purchases. You’ll also get U.S. based customer service that is available to help you with your account 24 hours a day.
We also love the rewards program the Discover it® Balance Transfer offers, including the fact that you’ll earn 5% back on up to $1,500 in spending in categories that rotate each quarter (then 1%). Since you also earn 1% back on every purchase you make, this card allows you to rack up rewards every day you use it. Amazingly, Discover will also double all the rewards you earn the first year! That’s hard to beat.
Keep in mind, however, that earning rewards while you pay down debt is never a good idea. The best step to take when you’re paying off debt is putting away your credit cards and switching to debit or cash instead. You’ll never get out of debt if you continue racking it up, so it’s in your best interest to stop using credit until you’re debt-free. Once you reach that milestone, you can reassess and decide if you’re ready to pursue credit card rewards.
The Bottom Line
The Discover it® Balance Transfer can be a spectacular option if you’re in debt and ready to make a change. Scoring 0% APR for 18 months can help you save tremendous amounts of money on interest, and you can also pay down debt faster all along. Having to pay a 3% balance transfer fee upfront isn’t ideal, but the interest savings you’ll receive can make the fee well worth it. Earning cash back rewards is also a plus, and the fact that the doesn’t charge an annual fee is just icing on the cake.
For that reason, we think the Discover it® Balance Transfer is best for:
- Consumers who have high interest debt they want to pay off
- Anyone who has the discipline to transfer a balance and stop using credit cards while they focus on becoming debt-free
- Consumers who want to earn cash-back rewards for each dollar they spend
Before you sign up for a new credit card for the purpose of getting out of debt, make sure you are prepared to do what it takes. That typically means reducing your spending, throwing as much money toward your debts each month as you can, and halting credit card usage while you focus on your goals.
Also make sure you compare balance transfer cards to find the right option for your needs. While the Discover it® Balance Transfer is a solid card to consider, some balance transfer credit cards offer a different set of perks including longer 0% APR offers and no balance transfer fees.
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