What's the best way to pay down a credit card balance as quickly as possible, while paying the least in interest, and without hurting your credit? What follows is a powerful method recommended by the most astute personal finance experts* to achieve exactly those objectives. It's extremely effective, completely legal, and leverages programs created by credit card issuers to your advantage. Follow these steps and start to become credit card debt-free.
Step 1: Use A Powerful Tool To Immediately Stop Paying Interest On Your Balance
Think of someone carrying a credit card balance like a patient who enters an emergency room bleeding badly. The first thing a doctor will do is stop the bleeding. It's no different when attacking a credit card balance; the first thing you do is stop the interest charges.
There's a simple way to do this, and it's brilliance is that it actually uses the banks' marketing offers to your advantage: find a card offering a long "0% intro APR balance transfer" promotional offer, and transfer your balance to it. These are cards which offer new customers a long period of time (often as much as 18 months) during which the card charges no interest on all balances transferred to it. We constantly track all the cards in the marketplace in order to find the ones currently offering the longest 0% intro periods.
If you need more motivation, just think of this: on a $10,000 balance, $150 of a $200 monthly payment would get vacuumed up by interest charges.** That leaves only $50 of your $200 that actually reduces your balance, the rest vanishing into bank pockets. That's just brutal. Use our reviews to find a card which offers the longest possible no-interest period while charging low, or even no fees. Moving your balances to the card you choose will stop the bleeding, allowing you to move on to step two.
Step 2: 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.
If you want to transfer a balance without paying a transfer fee
The Facts: No balance transfer fee. No annual fee. Pros: The Chase Slate® does not charge a transfer fee while still delivering 15 months interest-free on any balance transfered in the first 60 days. It's a compelling combination, and the reason the Slate is tied as our highest rated balance transfer card. Normally you have to go to family in order to get a free "loan" like that! You only need good credit to be approved as opposed to excellent, so it's a bit easier to get in than most cards offering this level of incentive. Cons: No significant rewards program. The Slate is all about the balance transfer features. The Verdict: If you don't need the entire 18 months offered by the BankAmericard, the Slate can be your best bet 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 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. More Details >
If you want to maximize the interest-free intro period on your transfer
The Facts: 18 billing cycles (months) of 0% Intro APR. No annual fees. Pros: If you transfer your current balance onto the BankAmericard® Credit Card, you won't have to pay any further interest on that balance until well into 2017. The card features an unbelievable 18 billing cycles (months) 0% APR period, which is the longest interest-free intro period here. If your goal is to stop paying interest for as long as possible, then this is your card. Cons: The card does charge a 3% balance transfer fee. 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 15% rate. Over the 18 billing cycle term, you would have paid $2,522 in interest.* Switching to this card would cost $300 in fees, but then nothing the rest of the way, for a net savings of $2,222 making the transfer. Not bad, you could do a lot with that extra cash. Most Appropriate For: Those who have large balances and coudl use some extra time with which to pay them down. More Details >
If you want cash rewards with a shorter interest-free transfer period
The Facts: 0% on balance transfers for 9 months, 1.5% cash back rewards program. $100 cash bonus. No annual fee. Pros: While neither the Quicksilver or the Freedom (below) top out our balance transfer list, both offer an intriguing combination of a longish 0% balance transfer period and a top of class cash rewards program. This is good if you want to consolidate your credit card balances, save through the balance transfer, but also earn rewards on any new spending you make. The Capital One® Quicksilver® Cash Rewards Card 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 for 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. More Details >
The Facts: 15 Months of 0% Intro APR, 1% Cash Back Rewards Program, $150 bonus. No annual fee. Pros: The Chase Freedom® is temporarily offering a fantastic deal to new card members; If you charge $500 on it in the first 3 months, you'll earn a $150 bonus. Combine that with the 1% standard cash back feature, plus 5% cash back in certain rotating spending categories per quarter (at the time of this writing it includes gas and local commuter transportation) and this card really starts to pay. All this and you get 15 months of 0% intro APR, and it requires good, not excellent credit, making it easier to get in. Cons: Charges a 5% balance transfer fee. The Verdict: A great combination of 0% intro APR, solid cash-back rewards, an attractive limited-time bonus offer while only requiring good credit. 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. More Details >