Did you rack up credit card debt during residency? 

Balance transfers can be a way to manage credit card debt.

Low salaries and high expenses during a residency can lead to accumulation of credit card debt. Physicians are often faced with high credit card interest payments as a result of their time in residency. Our advisors help physicians navigate the unique challenges they face.

Here are some methods to get you started:

Step 1: Stop the Bleeding

Your first step can be to get a break from high-interest payments by transferring your balance to a new card.

Look For 0% Introductory APR: Many cards offer a 0% interest rate for a promotional period (typically 12-21 months). This can give you time to pay down your debt interest-free.

Check the Credit Limit: Analyze your total debt and make sure the new card has a limit high enough for the balance you intend to transfer.

Compare Balance Transfer Fees: If you aren’t careful, the transfer fee could be large. Most cards charge a fee (3-5% of the transferred amount). Consider this in your decision.

Be Aware of Conditions: At the end of the introductory APR period, many cards will revert back to a high interest rate. Make sure you know when that will kick in and what you will be paying. Also, pay attention to any potential penalties in the terms and conditions to avoid unexpected fees.

Automate Payments: You could trigger a higher APR if you miss a payment. So enable the automatic payments to make sure you pay at least the minimum required with your new card. This will also help you to stay on track with your repayment plan.

Step 2: Plan for The Bigger Picture

While a balance transfer can provide temporary relief, it’s not a permanent solution. You still need a plan to pay down your debt and achieve your future financial goals.

Understand Your Student Loan Options: The Public Service Loan Forgiveness and Income-Driven Repayment forgiveness options can make a big impact on your financial future. Understanding the differences and requirements of each is important for borrowers seeking relief from their Federal student loans. Read our insights here: READ MORE

Create A Budget: The balance transfer is only a useful tool if you can control your spending and avoid accumulating more debt. Take an honest assessment of your spending habits and create a realistic budget for yourself. Once you achieve an income increase, you can adjust your expenditures.

Track Your Progress: Regularly monitor your progress towards your debt reduction and adjust your plan as needed. Celebrate your progress!

Avoid Future Debt: Once you are able to, build an emergency fund to help you avoid using credit cards for unexpected expenses in the future.

Create A Financial Plan: As physicians start saving later than their peer group, they face higher tax rates than many others, worry about creditors, and possibly must navigate significant student loan burdens. Physicians should work with advisors who understand the appropriate protocols to install a financial plan mindful of their specific circumstances.

Talk with an Axias Wealth Advisor today to shape your financial future and help you to feel empowered about what’s ahead.

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