We get it, because we’ve been there. As a doctor or doctor-in-training, you are likely incredibly busy. We know speed and convenience are crucial, so when it comes to paying for anything, it’s easy to reach for a credit card.
Credit card debt can quickly become overwhelming, especially for busy physicians, dentists, and veterinarians who are in training or practice. According to the AAMC, 13% of graduating medical students carry an average of $5,000 in debt. This rises while in training and practice, with 24% of physicians carrying credit card debt.
If not managed carefully, this debt can hurt your credit score and impact your financial future. Fortunately, there are several steps you can take to pay off your credit card debt and reduce your interest payments.
Why Does Interest Rate Matter So Much?
You’ve seen APRs and interest rates next to credit card offers, but it’s difficult to translate those numbers into the actual impact it will have on your bank account. The truth is that the amount of interest you’re charged makes a massive difference to how much you need to repay and how long you will be paying it off.
As an example, let’s assume you have $10,000 in debt on your credit card and that you can afford to pay $250 every month:
| Loan Amount | Interest Rate | Time To Pay Off | Total Interest Paid | Total Paid |
| $10,000 | 20.40% APR (average rate) | 5 years, 6 months | $6,491 | $16,491 |
| $10,000 | 24.15% APR (average rate) | 6 years, 8 months | $9,797 | $19,797 |
| $10,000 | 29.49% APR (high interest card) | 12 years, 0 months | $25,904 | $35,904 |
Compared to the lowest interest rate credit card, repaying the high-interest credit card will lead to you repaying the debt for an additional six-and-a-half years, and you’ll pay almost four times as much in interest!
Try some numbers for yourself to see how much of a difference interest rates make.
How Increasing Your Minimum Payment Makes An Impact
Regardless of how much interest you’re paying, if you are able, it is important to increase the minimum you repay each month. Let’s see what happens when you squeeze another $100 out of your budget and put it towards your credit card debt, repaying $350 a month against that same $10,000 balance.
| Loan Amount | Interest Rate | Total Interest Paid @ $250 Per Month | Total Interest Paid @ $350 Per Month | Total Savings Over Life Of Loan By Increasing Your Monthly Payment |
| $10,000 | 20.40% APR | $6,491 | $3,527 | $2,964 |
| $10,000 | 24.15% APR | $9,797 | $4,646 | $5,151 |
| $10,000 | 29.49% APR | $25,904 | $6,841 | $19,063 |
What If I Refinance My Credit Card Debt?
Refinancing your credit card debt can be a great option to lower your interest rate, reduce your monthly payments, and simplify your life. You can search for a personal loan with interest rates less than your credit card. This will reduce the amount of interest you end up paying, saving you money. Let’s take a look at how much you could save over a five-year loan term.
| Loan Amount | Credit Card Interest Rate | Total Interest Paid – Credit Card | Personal Loan Interest Rate | Total Interest Paid – Personal Loan | Total Savings With A Personal Loan |
| $10,000 | 20.40% APR | $6,742 | 9.36% APR* | $2,759 | $3,983 |
| $30,000 | 24.15% APR | $20,227 | 9.36% APR* | $8,279 | $11,948 |
| $50,000 | 29.49% APR | $33,711 | 9.36% APR* | $13,798 | $19,913 |
These savings speak for themselves. Choosing a PRN Personal Loan over a credit card can save you thousands of dollars in interest by the end of the loan.
If you have multiple credit cards weighing you down, credit card consolidation is another type of refinancing that could help you. In a Medscape survey from 2022, 41% of physicians report having more than 5 credit cards. If you have multiple credit cards with debt, you can consolidate them, so you’re only making a single payment each month, saving you time!
Doctors can experience difficulty with personal loans because of the likelihood of high rates due to their bad credit after residency and other life events. Panacea Financial’s PRN personal loan removes this barrier by not basing your approval on your credit score.
Additionally, PRN loans have no fees and reduced or zero payments during an introductory period based on where you are in your career. Whether in your last year of school, in residency or already in your career, these personal loans can be a great alternative to credit cards or a better option for credit card debt consolidation.
Steps For Overcoming Credit Card Debt
- Whenever you can, pay more than the minimum payment. Squeeze an extra $100 out of your budget every month and put it towards your card debt.
- If you’re so busy you forget to make payments on time, a great safeguard is to go to your credit card provider’s website, look at the minimum monthly payment, and set an autopay amount of $100 or $200 more.
- Get an app, text or email notification of your credit card balance on a daily basis. This will help you stay aware of how much you owe and help you be mindful of future purchases.
- If you want to consolidate your credit card debt, consider refinancing to simplify your life and reduce your payments.
- Ask for help! We have concierge staff available 24 hours a day, 7 days a week.
We know how challenging it is to manage your debt as a doctor or doctor-in-training—we’ve been there. It’s so tempting to just spend “that little bit more” on a credit card, after all, you deserve it for all the time and effort you’ve put into your career.
Trust us, we’re not saying you have to live like a monk! But, it’s much better to get it under control early so you’re not struggling with it years down the line.
We’re Here For You
Here at Panacea Financial, we were formed for doctors, by doctors, to provide the financial support you need. We understand your challenges—inadequate cash flow, loan debt, huge upfront costs—and we know how to help. We’ll support you through your entire journey from student to resident to practicing doctor.
*Example chart shows calculations based on a 5 year Panacea Financial PRN Personal Loan with a fixed rate of 9.36% APR which is the average median funded APR for Panacea PRN Personal loan borrowers who took out a loan with a 5 year term from January 1, 2022-January 1, 2023.
Lowest rates are reserved for the most qualified borrowers. The ‘High-Interest Rate Credit-Card’ APR shown is the average credit card APR reported by Wallethub for Q4 2022 under their Good Credit category. The savings estimate also assumes that the borrower doesn’t take out any additional credit card debt during the same period. Both calculations assume 60 total monthly payments and no pre-payment amounts.
Panacea Financial, a division of Primis. Member FDIC.
