Between the rising price of gas and the increasing costs of food and groceries, many Americans are finding themselves stretched thin. As a result, some are taking on credit card debt to help bridge the gap.
A recent CNBC and SurveyMonkey Quarterly Money Survey found that of the 76% of Americans in debt, over half (52%) spend at least a quarter of their income on paying it off. This financial burden can drag on for months or years, potentially dragging down your credit.
High interest rates – currently averaging around 21% – make credit card debt sticky and hard to get rid of. This means much of your payment often goes toward interest, not your original principal.
If you’re struggling with credit card debt in particular, a 0% APR card could provide the time you need to pay it off sans interest. Then, you can focus on other pressing debt where interest can’t be paused, like a car or mortgage.
Here’s how to organize your debt and when a 0% APR could help, plus other resources to consider if a credit card isn’t the right fit.
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Take inventory of your debt
If you’re dealing with multiple types or instances of debt, the first step is to get a clear, holistic picture of what you owe.
Make a list of every type of debt you have, whether it’s a credit card, mortgage, loan, car or something else, and make sure you collect a few key pieces of info about each. That includes:
- Your current balance
- APR or interest rate
- Minimum monthly payment
- Remaining term
- If the rate is fixed, variable or a promotional one
- Whether the debt is secured by property
- Current state of delinquency
Typically, the next step is to separate your high-cost debt from your low-cost debt so you can target the debt that’s actively costing you the most. However, your priorities may differ depending on your financial situation. You may prefer to prioritize your rent or mortgage, prevent an account from delinquency or eliminate a small debt first.
Not all debt is eligible to be moved to a 0% APR card. Mortgages and auto loans are typically secured by either the property or a vehicle, meaning they are ineligible. However, using a 0% APR card to pause interest charges means you’ll have more funds to put toward the other debt.
It’s important to remember that while a 0% APR card is a powerful tool, you’re still responsible for paying off the debt, ideally before interest charges kick in.
When could a 0% APR card help?
A slight catch-22, but to qualify for a 0% APR card, you typically have to have a relatively strong credit score. This is primarily because banks reserve offers for lower-risk borrowers, since banks aren’t earning interest on those balances during the introductory period.
Your score doesn’t have to be perfect, but if it’s below the “good-to-excellent” range (or a FICO Score of 670 and up), you may have a tougher time getting approved for cards with significant zero-interest offers.
Understand the costs
If you’re approved, know that many cards charge a balance transfer fee, so just make sure to include that in your overall calculations. A balance transfer fee is a one-time charge for moving debt from one credit card to another, and it typically ranges from 3% to 5%.
For instance, if you’re moving $10,000 of debt to a card with a 3% balance transfer fee, your starting balance would be $10,300. Oftentimes with larger amounts of debt, even paying the transfer fee is worth the savings in interest over time.
Make a repayment plan
Even though interest doesn’t accrue on the qualifying transferred balance during a 0% APR period, you still have to make minimum payments. If you miss your payments, there’s a chance you could lose your intro APR period and start accruing interest again. Any balance remaining when the promotion ends starts accruing interest at the card’s standard APR.
The main question to ask yourself is: Can I pay off the full balance in time? To calculate your average monthly payments, simply take your starting debt balance (including the balance transfer fee) and divide that by the length of your APR period.
Using the $10,300 balance from the previous example, you’d need to pay just over $490 per month on a card with a 21-month 0% APR period to pay off your balance before interest starts accruing.
Which 0% APR cards should you consider?
If a 0% APR card sounds like it could help you, here are a few cards that offer ranges of promotional APRs, all bearing a $0 annual fee.
The Wells Fargo Reflect® Card pulls double-duty, offering a 21-month 0% intro APR period on both new purchases and qualifying balance transfers, followed by a 17.49%, 23.99% or 28.24% variable APR. Balance transfers made within 120 days from account opening qualify for the intro rate; the balance transfer fee is 5% with a $5 minimum. While the zero-interest period is the card’s biggest draw, it also comes with cell phone protection of up to $600 against damage or theft (subject to a $25 deductible).
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
If you’d prefer a 0% APR card that comes with a welcome bonus, the Chase Freedom Unlimited® (see rates and fees) offers a $200 bonus after spending $500 on purchases in the first three months from account opening. The card earns a flat 1.5% cash back on all purchases, plus 3% cash back on dining and at drugstores. The 0% intro APR period lasts for 15 months, applies to both new purchases and balance transfers and, once it ends, an 18.24% to 27.74% variable APR will apply.
The Chase Freedom Unlimited® is a no-annual-fee card that earns generous cash-back on everyday purchases and a lucrative welcome bonus. Plus, if you pair it with a premium Chase credit card that allows point transfers, you can convert your cash back into flexible travel rewards.
- Users get a high rewards rate and strong welcome bonus
- Purchases and balance transfers receive an intro APR
- No annual fee
- Has a foreign transaction fee
- Few rewarding ongoing benefits
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select’s editorial staff.
- Earn a $200 Bonus after you spend $500 on purchases in your first 3 months from account opening
- Enjoy 5% cash back on travel purchased through Chase TravelSM, our premier rewards program that lets you redeem rewards for cash back, travel, gift cards and more; 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and 1.5% on all other purchases.
- No minimum to redeem for cash back. You can use points to redeem for cash through an account statement credit or an electronic deposit into an eligible Chase account located in the United States!
- Enjoy 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 18.24% – 27.74%.
- No annual fee – You won’t have to pay an annual fee for all the great features that come with your Freedom Unlimited® card
- Keep tabs on your credit health, Chase Credit Journey helps you monitor your credit with free access to your latest score, alerts, and more.
- Member FDIC
Balance transfer fee
Intro fee of either $5 or 3% of the amount of each transfer, whichever is greater, in the first 60 days. After that, either $5 or 5% of the amount of each transfer, whichever is greater.
Foreign transaction fee
3% of each transaction in U.S. dollars
For those who prefer their credit card skip rewards categories altogether, the Citi Double Cash® Card is a great option, earning a flat 2% cash back on all your purchases (1% when you buy and 1% when you pay your bill). On top of earning solid rewards, the card also offers a 0% introductory APR for 18 months on balance transfers, followed by a 17.49% to 27.49% variable APR.
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
Alternative ways to manage credit card debt
If a 0% APR card isn’t going to meet your needs or you don’t qualify for one, here are a few other options to consider.
Call the current issuer
If you’re having trouble keeping up with credit card payments, contact your bank or credit card issuer. Many financial institutions offer hardship or loss-mitigation programs, which could help make your situation more manageable. These could include:
- A temporary hardship APR
- Lower payments
- Fee waivers
- Different payment dates
- A structured repayment program
Depending on the situation, enrolling in a plan like this could have repercussions, like your card being closed or your credit limit being reduced.
Consider a fixed-rate consolidation loan
Using a debt consolidation loan can be a useful way to combine multiple types of unsecured debt, leaving you with a single monthly payment. These loans usually have higher approval rates compared to a 0% APR card, as many companies are willing to work with those with less-than-perfect credit.
Avant accepts borrowers with a minimum FICO Score of 550. With personal loan amounts ranging from $2,000 to $35,000 and APRs as low as 9.95%, a loan could be a good alternative for aiding with debt repayment.
Lends to applicants with poor credit and offers next-day funding.
- Lends to applicants with poor credit
- No early payoff fee
- Can prequalify with a soft credit check
- Funding often available next day
- Late-payment grace period of 10 days
- Origination fee
- Potentially high interest
- No autopay discount
- No direct payments to creditors for debt consolidation
- No co-signers
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