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Debt help through credit cards

By Leslie McFadden · Bankrate.com
Thursday, February 10, 2011
Posted: 2 pm ET

Carry a balance on your credit card? Some issuers are marketing new credit cards that offer rewards for paying down debt, Smartmoney.com reports. The article "Can Credit Cards Help You Manage Money?" highlights several cards that reward good payment behavior.

Bonus for paying some, not all of the debt: TD Bank's TD Payment Plus Credit Card offers an automatic statement credit of 50 percent of the month's interest charges if the customer pays 10 percent or more of the balance on time. Consumers who pay 5 percent to 9.99 percent of the balance still get a credit of 25 percent of the month's interest charges.

Quarterly pay-on-time bonus: Citi Forward Card offers to reduce your purchase APR by 0.25 percent if you make a purchase, stay within the credit limit and pay on time for three consecutive billing cycles, for a maximum of eight reductions a year and a lifetime reduction of 2 percent.

Cash-back bonus for on-time payments: Journey Student Rewards Credit Card from Capital One offers 1 percent cash-back on all purchases and an additional 25 percent cash-back bonus on the cash-back amount earned each month the bill is paid on time.

One credit card that isn't new -- the Discover Motiva Card -- offers one month's worth of interest charges for every six on-time payments made consecutively. According to Discover's website, however, that reward will soon change so that each bill paid on time triggers a bonus of 5 percent of the interest charges shown on the next statement. "These changes will be effective for billing periods beginning after May 1, 2011 starting with the first billing period that your Pay-On-Time Bonus counter is at or resets to zero," the site states.

Compare, compare: With any credit card offer, you always want to read the fine print and compare it with other offers. Rebates aside, if you're someone who habitually carries a balance, the biggest concern should be the interest rate you're paying and whether or not the card has an annual fee. Consider whether these cards are cheaper than other low-interest credit cards available to people with your credit level. Use our FICO score estimator to get your score range.

If you rarely carry a balance, a traditional cash-back or rewards credit card makes more sense.

What's your preferred credit card for carrying a balance?

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