Carrying a load of credit card debt sucks, to put it plainly. Compound interest (paying interest on interest) can make your debt grow very quickly, especially if your credit card compounds interest on a daily basis (most credit cards do).

Although Americans have collectively been able to cut down on credit card debt (Nilson Report statistic), many of us still owe a lot of money to credit card companies.

Getting rid of credit card debt can be confusing, and many of us look in all the wrong places. We try to make higher payments in hope of lowering our interest payments by cutting down our card balance. Or we take out a personal loan to refinance our debt.

But the root of the problem lies in compounding interest, which can make your debt grow just as fast (or faster) than your payments make it shrink. Getting a personal loan might help you pay a lower interest rate on that debt, but even a fair interest rate can result in a lot of money above what you actually owe.

Put A Freeze On Interest Payments!

The first step is to completely get rid of interest payments and most of all, compounding interest. After all, if you carry a balance and are paying interest on it, it's probably because you don't have money to spare, especially for down-the-toilet interest payments.

Cutting up your credit card won't help a bit here. In fact, strange as it may sound, the solution here might be to get another credit card. That's because some credit cards give you 0% introductory APR rates for a certain amount of time after you open your new card account. You should specifically look for a good balance transfer credit card, one with a 0% intro APR on balance transfers for a long period of time (shoot for 12 months or more).


Just To Drive The Point Home

Let's take a look at this example of what could happen if you did not pay off your debt fast. Let's imagine that your credit card has a 20% APR and that you carry a credit card debt of $2,764 (that's the number you would get if you divided US credit card debt in the Nilson Report mentioned above by the US population).

Even if you paid $150 monthly towards getting rid of your credit card debt, it would still take you 23 months (nearly 2 years) to pay off that debt. You will spend around $565 just on interest payments before you finally hit the black.

That's how easy it is to get heavily in debt. $2,764 may not seem like a huge amount, just a cheap vacation or a used car. Without paying interest, $150 a month should pay back the same loan in around 18 months and a half. The other 4 and a half months of payments is money down the drain.

Looking at those numbers, the benefits of transferring your balance to a credit card that gives you a long 0% introductory APR period become pretty clear. In the above scenario, you would be able to save $565 in unnecessary interest payments and get out of debt 4 and a half months sooner by taking advantage of a 0% introductory APR offer on balance transfers for 18 months or more.

Are There Other Solutions?

Aside from not carrying a balance in the first place, or getting a friend or relative to give you an interest-free loan, a balance transfer credit card provides the only way to enjoy 0% interest for such a long period of time.

Of course if you don't pay off your debt by the end of the introductory APR period, you will pay interest as well. That's why you will want to do everything in your power to pay off that debt within that intro APR period. Once you've paid off your debt, take steps to avoid slipping into it again. One of the best ways to do this is to spend only what you can afford to pay back in full before your credit card's due date.

Here are some of my favorite credit cards for balance transfers to help you beat your debt once and for all: