Simple Trick To Pay Off Your Card Balance Earlier
Pay off your credit cards years earlier, and potentially save thousands with this technique.
If you are carrying a credit card balance, think of this: on a $10,000 balance, about $150 of a $200 monthly payment gets vacuumed up by interest charges .** That leaves only $50 of your $200 that actually reduces your balance, the rest vanishing into bank pockets, which is just brutal. So if it were possible to stop the interest payments, allowing all your payments to go directly toward paying off the balance, you could obviously pay off your balance far, far more quickly.
There is a simple way to immediately force credit card companies to stop charging you interest, and it's brilliance is that it actually uses the banks' marketing offers to your advantage:
Find a card offering as long a "0% intro APR balance transfer" promotional offer as possible, and transfer your balance to it.
These are cards which charge no interest on any balance you transfer to them during the promotional period, and some of these 0% interest periods can be as long as 16 months. During this time you flip the story: instead of only $50 of your $200 payment going toward your balance, every penny of that $200 helps get you out of debt, and $0 goes to the bank's profits. We provide a breakdown of the cards offering the best 0% intro APR offers at the end of this article, including one that offers the 0% intro rate while charging no balance transfer fee and another that does charge a transfer fee, but then offers a full 18 months of 0% intro APR.
Then Power Through Your Balance During The 0% Period.
Once you've transferred your balances and put a stop to the interest charges, it's time to capitalize on the interest-free period to really break free of the debt. The best part of this is how simple it is: just keep making the payments you used to make when you had to pay big interest payments. Going back to the $10,000 example above, if you transferred that balance onto a card like the Chase Slate (which offers 15 months of 0% intro APR with no transfer fee) and maintained the same $200 monthly payment, you can see how much faster you'll be reducing your balance in the chart below.
As you can see, without using the 0% card, the same $200 monthly payments barely make any headway. It's like swimming upstream, or walking while taking a step back for every two steps forward. That's no way to swim or walk, and attempting to pay off your cards while paying high card interest rates is no way to manage your finances. Move your balances onto one of the cards below, stop getting crushed by interest, and start making real progress toward getting rid of your card debt.
The No Transfer-Fee Card
The Chase Slate® is tied as our highest-rated balance transfer card, and for good reason. It charges no fee for transferring your balance to it in the first two months, no annual fee, and no interest on balances transferred for a full 15-month 0% intro APR period. This makes it a phenomenal tool to gain control of your credit card debt, as you can make a costless balance transfer, then use the 15-month interest grace period to pay down your balance.
The Verdict: If you don't need the entire 18 months offered by the BankAmericard, this can be efficient since it doesn't have a balance transfer fee. No transfer fee and no annual fee, combined with the 0% intro APR means that this is really free money for the 15 month term, no catches.
Most Appropriate For: Those who want a no-fee way to stop paying interest, and possibly pay off the cards during that breather. Those with good rather than excellent credit.
Least Appropriate For: Those who pay off their balances every month would be better served getting a card paying high rewards. Note that the 0% transfer fee is an introductory offer, so be sure to transfer your balance in the first 60 days, or there will be a fee.
Recommended credit: Just Good. The Chase card has the most lenient credit requirements of our top balance transfer cards.
The Ultra-Long 0% Intro APR Card
The BankAmericard® Credit Card is tied as our highest rated balance transfer card, featuring an unbelievable 15 billing cycles (months) 0% APR intro period. This means that if you were to roll your balance over onto the card today, you wouldn't have to pay interest until well into 2018. The card does charge a 3% balance transfer fee (or $10, whichever is greater), but if you’re looking to avoid paying any interest on your credit card balances for as long as possible, the BankAmericard could be your card.
The Verdict: Getting a loan this cheaply for this long is pretty amazing. If you're carrying a balance, and realistically you know you will have to carry that balance for a while, this card becomes a no-brainer. As an example, assume you have a $10,000 balance on your current cards at a 18% rate. Over the 15 billing cycle (month) term, you would have paid $3,098 in interest.* Switching to this card would cost $300 in fees, but then nothing the rest of the way, for a net savings of $2,798. Not bad, you could do a lot with that extra cash.
Most Appropriate For: Those who have large balances and want as much interest-free time as possible to pay the principle down.
Least Appropriate For: Those who pay off their balances every month or every few months.
Credit Required: Good to Excellent
The Cards With Long 0% Intro APR AND Cash Rewards Programs.
Pros: Chase's new Freedom Unlimited card is essentially an improved version of the old Freedom. They bumped the base cash back rate all the way up to an industry leading 1.5%, and pay that full 1.5% on all spend, with no limit or spend category restrictions. Unlike most other high paying cash back cards, you don't have to worry about categories or have to activate anything. You'll receive the full 1.5% back as you make your spend, on all spend, automatically. In addition, Chase is temporarily offering a cash bonus to new card-members. If you charge $500 on it in the first 3 months, you'll earn a $150 cash bonus. Finally, Chase is also offering new card-members 15 months of 0% interest for the first 15 months of using the card to make new purchases. So during that period, you can use the card without paying any interest on balances you tally, while still earning cash back. The card requires good, not excellent credit, making it easier to get in.
Cons: Charges a 5% balance transfer fee. This is on the high side, so we recommend looking at the Slate or BankAmericard if your goal is to transfer a balance. The Freedom Unlimited should be viewed as a cash back card.
The Verdict: One of the strongest cards available to those with good (but not perfect) credit. The card combines industry leading cash back rates (1.5% on everything) with a strong 15 months of 0% interest on new purchases combined with a $150 cash bonus when you use the card to make $500 in spend in the first 3 months.
Most Appropriate For: Those with good credit seeking a daily-use card offering great cash back rewards and 0% intro APR. Best for new charges.
Least Appropriate For: Balance transfers, as it charges the 5% fee while offering no more free term than the Slate (which has no transfer fee).
Credit Required: Good to Excellent
Pros: Capital One's Quicksilver card makes things simple: you earn 1.5% cash back on all your purchases, with no limit and no category restrictions or games. We included the card in our balance transfer list because it offers 0% intro APR 9 months on all balances transferred.
Cons: Does charge a 3% balance transfer fee. Requires good credit to get in.
The Verdict: If you're looking to transfer a balance and make some purchases, you can use this card to avoid paying interest during the intro period AND earn cash rewards.
Most Appropriate For: Anyone who might make some large purchases in the near future, or regularly charges a lot on their cards. Making the charges on the Quicksilver would earn cash back but not require any interest during the intro period.
Credit Required: Good to Excellent