If you currently find yourself in debt, you may view credit cards as your worst nightmare. And if you’ve found that they have facilitated unrestrained impulse buying, you could be right.
But in some cases, credit cards can actually aid you in digging yourself out of debt. It won’t be easy (it never is), but using the below credit card perks could help you pay off credit card debt in a hurry.
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Credit card perks for debt payoff
Intro APR offers
Likely the most powerful debt management tool you’ll find on a credit card is a 0% intro APR offer. This allows you to carry a balance for an extended period of time without paying any interest whatsoever. The best 0% APR credit cards offer an interest-free window on balance transfers, while others only waive the interest for new purchases. Some waive the interest on both.
For example, the Wells Fargo Reflect®Card currently features a 0% intro APR for 21 months on qualifying balance transfers and purchases (then 17.49%, 23.99% or 28.24% variable). Note, balance transfers made within 120 days from account opening qualify for the intro rate, and a balance transfer fee of 5% (min $5) applies.
The Wells Fargo Reflect® Card is one of the absolute best cards you can apply for if you want to save on interest and pay down debit quickly thanks to its extra generous intro-APR offer on purchases and qualifying balance transfers.
- Incredible intro-APR for purchases and qualifying balance transfers
- No annual fee
- Cell phone insurance: up to $600 of cell phone protection against damage or theft. Subject to a $25 deductible
- No rewards
- No welcome bonus
- High balance transfer fee
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select’s editorial staff.
- Apply Now to take advantage of this offer and learn more about product features, terms and conditions.
- 0% intro APR for 21 months from account opening on purchases and qualifying balance transfers. 17.49%, 23.99%, or 28.24% variable APR thereafter; balance transfers made within 120 days qualify for the intro rate, BT fee of 5%, min: $5.
- $0 annual fee.
- Up to $600 of cell phone protection against damage or theft. Subject to a $25 deductible.
- Through My Wells Fargo Deals, you can get access to personalized deals from a variety of merchants. It’s an easy way to earn cash back as an account credit when you shop, dine, or enjoy an experience simply by using an eligible Wells Fargo credit card.
Balance transfer fee
Foreign transaction fee
There’s also the Citi Simplicity® Card, which currently comes with a 0% intro APR for 18 months on balance transfers from the date of account opening (then a variable APR of 17.49% to 28.24%). Its balance transfer fee is 3% of the transferred balance ($5 minimum) for balances transferred within the first four months of account opening, then 5% of the transferred balance ($5 minimum) after that.
The Citi Simplicity® Card has amazing intro-APR offers and is particularly valuable for balance transfers due to its lower introductory fee.
- Long intro APR offers for balance transfers
- Low intro-fee for balance transfers
- No annual fee
- No rewards
- No welcome bonus
If you’re currently struggling with big interest payments, you’re best served by opening a card offering 0% intro APR on balance transfers. Relocating your current debt (such as from credit cards and personal loans) will allow you to repay what you owe considerably faster, as every red penny you pay goes toward the principal.
It’s also worth noting that you may occasionally receive targeted low-APR offers on your existing cards via email or snail mail. Typically, all you have to do is opt in.
Pay-over-time features
Some credit card issuers provide helpful features to either pay down your debt or avoid hemorrhaging money in interest when you know you’ve got a big upcoming expense you need to float.
For example, Chase cards have two options:
- Chase Pay Over Time. After you swipe your card for a purchase of $100 or more, you can elect to pay a fixed monthly fee with equal monthly installments instead of making interest payments. A Pay Over Time plan lasts between three and 24 months.
- My Chase Loan. Effectively a personal loan borrowed from your card’s credit line, My Chase Loan doesn’t require a credit check. You simply relinquish a chunk of your credit limit in exchange for cash. You’ll benefit from a lower fixed APR and no origination or early payoff fees.
For example, if you’ve got the Chase Freedom Unlimited® (see rates and fees), you could use a My Chase Loan to receive cash and pay off a Citi credit card. Because the My Chase Loan comes with a (relatively) lower APR than a rewards credit card, this strategy could save you a lot of money.
Similarly, American Express offers a program called Plan It. If you have an American Express card, such as the Blue Cash Everyday® Card from American Express, you can split up a larger transaction into fixed monthly payments and a flat monthly fee in lieu of interest. Transactions of $100 or more qualify for Plan It.
Rewards
The Capital One Quicksilver Cash Rewards Credit Card has no annual fee, cash-back rewards and a generous intro-APR offer, which make it a great option for saving on interest while earning rewards.
- Simple rewards structure with no caps or categories to track
- Long intro-APR offer
- No annual fee
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select’s editorial staff.
- Earn a one-time $200 cash bonus after you spend $500 on purchases within 3 months from account opening
- Earn unlimited 1.5% cash back on every purchase, every day
- $0 annual fee and no foreign transaction fees
- Earn unlimited 5% cash back on hotels, vacation rentals and rental cars booked through Capital One Travel
- No rotating categories or sign-ups needed to earn cash rewards; plus, cash back won’t expire for the life of the account and there’s no limit to how much you can earn
- 0% intro APR on purchases and balance transfers for 15 months; 18.49% – 28.49% variable APR after that; balance transfer fee applies
- Top rated mobile app
Balance transfer fee
- 3% for the first 15 months; 4% at a promotional APR that Capital One may offer you at any other time
Bonus: Payoff incentives
You’ll occasionally find a credit card that rewards you not just for spending but for paying down your balance. For example, the Citi Double Cash® Card offers an intro APR and earns 1% back when you make a purchase and another 1% back when you pay off that purchase (effectively 2% everywhere).
What makes the Citi Double Cash® Card special is that it sits near the top of its class in several categories. It is an excellent option if you want flat-rate rewards, a balance transfer intro-APR or no annual fee.
- Balance transfers get a long intro APR
- Generous flat-rate cash-back rewards structure
- Earns transferable rewards
- No annual fee
- It has a foreign transaction fee
- Intro APR only applies to balance transfer
- Points transfer ratios are reduced compared to premium cards
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select’s editorial staff.
- Earn $200 cash back after you spend $1,500 on purchases in the first 6 months of account opening. This bonus offer will be fulfilled as 20,000 ThankYou® Points, which can be redeemed for $200 cash back.
- Earn 2% on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases. To earn cash back, pay at least the minimum due on time. Plus, earn 5% total cash back on hotel, car rentals and attractions booked with Citi Travel.
- Balance Transfer Only Offer: 0% intro APR on Balance Transfers for 18 months. After that, the variable APR will be 17.49% – 27.49%, based on your creditworthiness.
- Balance Transfers do not earn cash back. Intro APR does not apply to purchases.
- If you transfer a balance, interest will be charged on your purchases unless you pay your entire balance (including balance transfers) by the due date each month.
- There is an intro balance transfer fee of 3% of each transfer (minimum $5) completed within the first 4 months of account opening. After that, your fee will be 5% of each transfer (minimum $5).
Balance transfer fee
There is an intro balance transfer fee of 3% of each transfer (minimum $5) completed within the first 4 months of account opening. A balance transfer fee of 5% of each transfer ($5 minimum) applies if completed after 4 months of account opening.
Foreign transaction fee
Similarly, the Upgrade Cash Rewards Visa® gives you 1.5% cash back only when you pay your balance — not when you make your purchase. (Though, unlike a traditional credit card, purchases are repaid through fixed monthly installment payments.)
The Upgrade Cash Rewards Visa® is a great option if you want predictable monthly payments and need an incentive to pay off your credit card balance.
- Earn rewards when you pay off your balance
- Check for approval with no credit score impact
- Fixed monthly payments
- No grace period on purchases
- No intro APR offer
- Lower rewards than 2% cards
These cards motivate you to pay your bills and also earn cash back that you can throw toward your debt.
Things to keep in mind before using these perks
The above strategies may sound pretty straightforward, but there are a handful of things to keep in mind to ensure you implement them effectively.
Factor in balance transfer fees
Zero-interest credit cards can save you serious money, but don’t forget to budget for balance transfer fees. These tend to be 3% to 5% of the transferred amount. They can add up, especially if you’re transferring several thousand dollars, but they can still be well worth the money you’ll save on interest.
Thoroughly read pay-over-time terms
When deciding whether to opt into a pay-over-time plan, be sure to read the terms to know how your monthly fee will be calculated and whether the total cost over time is truly cheaper than your normal APR. You must also know which transactions are eligible; not all purchases will qualify. For example, cash advances, annual fees and balance transfers typically are excluded.
Balance transfer credit cards are only as useful as their credit limit
To open the best balance transfer cards, you’ll likely need a good credit score (think a 670 FICO Score or better). But to improve your chances at getting a meaningful credit limit, we recommend waiting until your credit score is 700 or above.
Here’s why: You can only transfer as much debt as your credit limit can hold — including the balance transfer fee. If you’ve got $10,000 in high-interest debt but you’re only approved for a 0% intro APR credit card with a $3,000 limit, that’s not going to be tremendously helpful.
Don’t overspend just to generate rewards
If you’re not careful, the prospect of earning credit card rewards can bewitch you into spending money you don’t have. Just remember that carrying a balance month-to-month will likely incur interest that more than negates any earnings you’ll get from your credit card. Overspending is never worth it.
Balance transfer cards typically can’t take on debt issued by the same bank.
Generally speaking, you can’t transfer a balance from one credit card to another if they’re from the same issuer. For example, you can’t open the Citi Simplicity Card to transfer a balance on your Citi Double Cash — but you could transfer a balance from your Chase Freedom Unlimited.
Understand all intro offer terms to avoid losing out on value
Before you pounce on any intro offer, be sure to read all the terms to avoid forfeiting value. As an example, a balance transfer credit card may require that you make your transfers within 120 days of account opening; otherwise, you won’t receive an interest-free window.
Beware of deferred interest
Deferred interest is one of the most insidious credit card features, and it tends to appear mostly on store credit cards.
It works by giving you an interest-free window for an extended period of time. But if you fail to repay your balance in full by the end of that period, the card will retroactively charge you all the interest you would have incurred as though that 0% interest window never existed. This can result in a huge interest charge of hundreds or more.
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