This Woman Found a Simple Way to Shave $12K Off Her Credit Card Debt
Editor’s note: This story was originally published in 2016.
Like most of us in our early 20s, Katherine didn’t always make the best choices when it came to her finances.
After finishing her degree at Chico State, Katherine was in search of a job, a place to live — a life.
So she decided to move to San Francisco, a city she’d loved visiting with her girlfriends while she was in college… and where the cost of living is legendary.
Soon, she was paying $2,325 for rent alone. Before utilities. With a roommate.
Her mounting credit card debt wasn’t surprising… but was certainly dangerous.
When she reached the $12,000 limit on her Southwest card, Katherine knew something had to change. But she didn’t know what to give up, or how to do it.
Getting Your Credit Balances to Zero
Katherine describes San Francisco as a “young professional playground.”
Not only does the Bay Area offer a ton of fun stuff to do (and spend lots of money on) — its famed tech boom means lots of opportunity for young inhabitants.
Soon, Katherine had landed a well-paid position in business development at a digital security startup.
But even with her $60,000 salary plus commissions, she was barely keeping afloat.
Although her monthly credit card payment was high, she never seemed to be able to make a dent in the total balance. It was “like being on a treadmill,” Katherine says.
She was only making the $274 minimum payments (plus getting charged $154/month in interest) — more than she could afford. And although the Southwest card offered travel rewards, it also came with a $99 annual fee to boot.
Determined to make it on her own, she refused to turn to her parents for a handout. But at such sky-high numbers, she didn’t know what to do.
Then her roommate told her a little bit about the startup she works for — SoFi.
The company offers personal loans and other financial services aimed at young professionals, but it’s nothing like a faceless bank.
It offers borrowers a community and hosts fun, educational opportunities — like webinars and happy hours.
It also factors in nontraditional applicant information when determining your loan eligibility, like education, career experience and free cash flow.
Best of all, its competitive interest rates meant Katherine would save literally thousands of dollars on her total credit card bill.
It was a no-brainer.
She took 15 minutes to fill out the online application, was approved in about a week, and saw the money in her account less than 48 hours after her approval.
She immediately transferred the whole $12,000 to the credit company.
Just like that, she was officially out of credit card debt.
How SoFi Saves You Money
Now that her statement read $0 — a sight topped only by births, weddings and especially decadent chocolate desserts — Katherine was out from underneath those impossible monthly payments.
But that isn’t the best part.
Her new 5% interest rate means she’ll save thousands of dollars on the $12,000 she owes: She was previously paying 15.24% interest to the credit card company.
Over the seven years she’ll be paying SoFi, she’ll pay slightly less than $2,000 in interest charges.
If she’d continued making minimum payments on her credit card, the number would’ve been closer to $26,000 ($14,000 in interest alone) — and taken her more than 25 years to pay off.
Plus, SoFi made all the terms of her loan easy to understand and fine-print-free. Her more reasonable $200 payments are deducted automatically on the first of each month, and she loves not having to think about it.
Oh, and they took her skydiving.
No, seriously. Katherine received an email about one of SoFi’s many community events, and it just happened to be an item on her bucket list.
From the trip up to the parachute down and the photos to prove it happened, the entire thing was free for SoFi members.
It’s totally understandable that Katherine asked herself, “Why didn’t I do this sooner?”
Is a SoFi Loan Right for You?
If you’re struggling to make high-interest credit card payments, taking out a personal SoFi loan might be an option for you.
The company also offers mortgages, mortgage refinancing, parent and student loans at some of the lowest rates around.
To qualify, you’ll need a good credit score and decent cash flow — which is good, since more income means you’ll be able to pay off your loan faster. They’ll also take your education and career history into account
And by the way, there’s no penalty if you pay your loan off early.
SoFi wants you to be fiscally responsible and knowledgeable enough to get debt-free. That’s why they sponsor so many events for their members — many of which are free.
Achieving a lower interest rate on the credit card debt you can’t seem to get ahead of is a huge first step toward financial independence.
Plug your own information into this calculator to see exactly how much cash you’ll waste if you keep making those minimum payments.
Paying off your debt with a personal loan can go a long way toward bringing your total expenses after interest down… to say nothing of the palpable relief you’ll feel when you see your statement read $0.
“I’m just so much happier because I don’t have to think about it anymore,” Katherine explains. “It’s been amazing.”
Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)
Jamie Cattanach (@jamiecattanach) is a contributor to The Penny Hoarder. Her creative writing has been featured in DMQ Review, Sweet: A Literary Confection and elsewhere.