What’s the worst thing about credit card debt? High interest rates? High balances? Never-ending monthly payments?
When I had credit card debt, what concerned me the most was feeling like it would never get paid off. Each month I paid more than the minimum, but the balance never seemed to go down. I simply couldn’t pay enough extra to make a dent in the total balance.
What’s worse, I was a personal banker at the time. Yes, the job that should have taught me the most about personal finance was the job I had when I first entered into credit card debt (thanks to a mixture of low pay, high student loan payments and lack of budgeting). I decided to take action early on though; and my opinion at the time was that an installment loan would be the best way to pay off my credit card debt.
The main draw of an installment loan was knowing exactly when the debt would be paid off. I didn’t care if the interest rate was higher than a balance transfer would be. What I really wanted was to know — without a doubt — that there would be an end date to the debt.
Unfortunately, I allowed myself to be influenced by my friends instead. “Get a balance transfer!” they said. “Pay zero percent interest and you’ll be paid off even faster!” I listened to their advice against my better judgement, and I ended up in debt much longer than the three-year plan I would have been on with an installment loan. How?