Cindy was used to coming in to work with bags under her eyes. Her colleagues would always enquire if she was feeling okay and if everything was okay at home. Frankly, she was sick of being asked and sick of the unwanted attention the question would bring. It’s true that she hadn’t been sleeping well, and clearly it was starting to show.
The reason she couldn’t sleep at night wasn’t so easy to address. Many things contributed to her stress that are pretty common – work pressures, relationship stresses and parenting issues. However, the one thing that tormented her mind the most came in the form of a fairly innocuous envelope in the mail every month – her credit card statement.
Over time Cindy had amassed a big balance on her credit card of over $10,000, despite having a good paying job and an above average credit score. She hadn’t planned on going into credit card debt. It started with a romantic getaway to the Caribbean for her and her husband. Her plan was to pay the trip off before it started to carry punitive interest rates; however, a combination of a nasty leak in her home’s roof and an unexpected dental care expense added to her balance significantly.
All of a sudden, what started as a simple romantic getaway charged to her credit card caused an out-of-control spiral that resulted in not only carrying the trip debt longer than expected, but a ballooning balance that left her feeling stressed, out of control and depressed.
The credit card balance sat in her head like a theatre marquee, always the first thing she saw when she went to bed and the first thing she thought of when she awoke. She was angry at herself for letting the debt spiral out of control, depressed that the minimum payments weren’t making a difference and she felt financially out of control. Like a small boat with a big anchor, it held Cindy back from managing her finances proactively, feeling in control and being the typically happy person her friends knew her to be.
Cindy’s predicament is made more obvious when we look at the numbers associated with her credit card debt. A $10,000 balance on a typical Canadian credit card at 19.9% APR would carry a minimum payment of over $200/month (that minimum payment declines over time as the balance decreases, but let’s assume Cindy can pay $200/month towards her credit card debt). It would take Cindy 9 years and $11,661 in interest payments alone, so it’s easy to understand why Cindy felt so helpless.
While procrastinating at work, Cindy read a blog post about a company called Borrowell that offers good credit to good credit Canadians and a faster, easier, cheaper way to pay off credit card debt. She was intrigued and began to learn how a low-rate term loan could significantly reduce her cost of debt and could get her “debt free” much quicker. Here’s what she learned:
Revolving Credit vs. Term Loans
Cindy learned about the difference between revolving credit and term loans. Revolving credit, such as a credit cards, are amazing if used responsibly and paid off before huge interest rates start applying. Term loans are fixed both in terms of monthly payments and length of loan. You always know how much you are going to pay and when the debt will be completely paid off.
Slightly Higher Monthly Payments Lead to Huge Cost Savings
In switching to a term loan, Cindy’s monthly payments actually went up, from $200/month to $318/month. So she needed to budget a little bit more per month for her payments. However, it was well worth it because instead of owing $11,661 in interest by end of term, she would only pay $1,431 in interest on the Borrowell loan. Clearly, investing $118/month to save over $10,000 in interest is a smart move to make.
Higher Monthly Payments At A Lower Rate Lead to Being Debt Free Faster
The benefit that interested Cindy the most about a Borrowell term loan was how quickly she could get out of debt. She was presented with options for both a 3 year term and a 5 year term. She selected the 3 year term and would plan to be out of debt 3 times faster than making her minimum credit card payments! That’s 6 years of her life she can live without the burden of oppressive credit card debt!
Here is a simple snapshot of how Borrowell helped Cindy save a ton of money and get out of debt three times quicker:
If you’re carrying credit card debt and it’s got you down, do some research on the options that are available to you to reduce both the interest charges and the ‘time to debt-free.’ Companies like Borrowell were established to help you reduce your credit card debt and get you to that amazing debt-free feeling.
Check your rate for free at Borrowell.com – it only takes one minute and won’t affect your credit score. A few minutes can save you thousands on interest payments and get you debt-free faster.
*This partner content is provided by Borrowell.com. RateSupermarket.ca is not responsible for maintaining or monitoring the accuracy of information in this content, and does not directly endorse the products and services featured.