Why is paying the minimum so costly?
When you pay only the minimum on a credit card, two things work against you. First, the minimum payment is calculated as a percentage of the outstanding balance, so as the balance falls, the minimum payment falls too. Second, interest continues to accrue on the balance. This can extend the repayment period dramatically and make the interest cost feel painfully out of proportion to the original debt.
What is a balance transfer?
A balance transfer moves your credit card debt to a new card with a 0% introductory interest rate, typically for a set period. During the 0% period, every penny you pay reduces the debt rather than covering interest. Balance transfer cards usually charge a one-off fee, often around 2% to 3% of the amount transferred.