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 with 0% APR period 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.
Top 0% Intro APR Balance Transfer Cards:
The Ultra-Long 0% Intro APR Card
The Verdict: Needless to say, between the cash back program that pays up to 10% and the long 18 -month 0% intro APR term, we're very impressed with this card.
Most Appropriate For: Those who want a no-fee way to stop paying interest, AND also could see themselves using the card to make new purchases. This way you'll get a full 18 months of 0% intro APR and the high cash back rate.
Least Appropriate For: If you don't plan on using your new card to make any new purchases, then the cash back program isn't as important. In that case, you'll want to carefully evaluate whether you need the extra 6 months of 0% interest (and are willing to pay the 3% fee in order to get them) the Discover it offers compared to the Chase Slate.
Credit Required: Good/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% Intro APR on Purchases 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 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% Intro APR on Purchases 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 on Purchases intro APR. Best for new charges.
Least Appropriate For: Balance transfers, as it charges the 5% 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