What’s the best way to pay off credit card debt? While there are many different techniques for paying off credit card debt, a balance transfer credit card can help you pay off credit card debt fast. If you use one of today’s best balance transfer credit cards, you could have over a year to pay off your transferred balance before it starts accruing interest.
How do balance transfer credit cards work? Balance transfer cards allow you to transfer and consolidate outstanding credit card balances onto a single card. This reduces the number of credit card payments you make every month, which can help you focus your debt-repayment efforts and pay off your debt more quickly.
Plus, balance transfer credit cards often come with 0 percent intro APR offers that give you a chance to pay off your transferred balance interest-free. The best balance transfer credit cards offer at least a year of 0 percent intro APR on balance transfers—and some balance transfer cards, like the Citi® Diamond Preferred® Card, give cardholders a full 18 months of zero interest introductory offer on both balance transfers and purchases (14.74 percent to 24.74 percent variable APR thereafter).
Are balance transfer credit cards a good idea? If you know how to use a balance transfer card wisely, it can be one of the best ways to pay off credit card debt. Want to know how to pay off credit card debt with a balance transfer? Here are some tips and tricks to help you pay off your credit card debt fast.
Consolidate all your credit card balances
One of the best ways to pay off credit card debt is by consolidating your debt into a single monthly payment. When you consolidate multiple credit card balances into a single outstanding balance, you no longer have to use strategies like the snowball method or the avalanche method to decide which credit card debt to prioritize. Plus, having just one debt payment every month means you can focus on making that payment as large as possible.
When you use a 0 percent intro APR balance transfer credit card to consolidate your debt, you not only combine multiple credit card balances into a single payment, but you also take advantage of your balance transfer card’s 0 percent intro APR to save money on interest charges. That’s a win-win.
Put as much money toward debt repayment as possible
With a 0 percent intro APR, 100 percent of your monthly payments goes toward paying off your balance—at least until the intro APR rate expires. If you want to save money on interest charges and pay off your debt more quickly, pay off as much of your debt as possible during your intro APR period.
When it comes to how to pay off credit card debt fast, start by asking yourself how much money you can afford to put toward your debt every month.
Then ask yourself if you can increase that number by $50. Or $10. Or even $5.
Use Bankrate’s credit card debt payoff calculator to learn how many months it will take you to pay off your debt with the payments you’re currently making—and how much faster your debt would disappear if you increased those payments by even a few dollars every month.
For example, let’s say you transfer a $2,000 balance to a balance transfer card like the Citi® Double Cash Card, which offers 18 months of 0 percent intro APR on balance transfers (13.99 percent to 23.99 percent variable APR thereafter). If you make a monthly payment of $75, you’ll be on track to pay off $1,350 during your intro APR period. That means you’ll be left with a balance of $650 when your new interest rate kicks in. If you’re able to put $100 toward your balance each month, you’ll only have a $200 balance after your APR period. While a monthly payment of $125 will have you paying off your entire balance with two months to spare.
Create a budget to help you prioritize debt repayment
If you’re having trouble finding the extra money to put toward debt repayment, it might be time to create a budget. A good budget helps you prioritize your biggest financial goals (like getting out of debt, setting up an emergency fund or saving for a down payment) while giving you just enough “fun money” to ensure you don’t feel like you have to miss out on life’s little joys.
A budget is also an excellent tool if you’re trying to pay off a balance transfer credit card before the intro APR expires. Divide your transferred balance by the number of months you’ll get your 0 percent intro APR rate to learn how much you’ll need to put toward your balance transfer credit card every month—and then set a budget that allows you to hit your goal.
If you transfer $3,000 in credit card debt to a balance transfer credit card with a 15-month 0 percent intro APR like the Wells Fargo Cash Wise Visa® Card, you’ll need to pay at least $200 every month to clear out your debt before the 0 percent intro APR expires (qualifying balance transfers, 14.49 percent to 24.99 percent variable APR thereafter). Can you set a budget that will allow you to set aside that money? That’s the best way to pay off your credit card debt.
You can create a budget on your own, with pen-and-paper or a spreadsheet—or you can use one of today’s best budgeting apps to help you stay on target. Whatever path you choose, remember that making the budget is only the first step. You have to stay within your budget to get the benefits! Otherwise, you could find yourself spending more than you can afford, neglecting your financial goals and—in some cases—adding to your credit card debt.
Avoid putting new purchases on credit
If you’re in the process of paying off credit card debt, don’t make it harder on yourself by adding new debt to your current balances. Avoid putting new purchases on credit, especially if it’s going to take you a few months to pay off the new charges.
How do you know whether making new credit card purchases is a good idea? If you can’t pay your statement balance in full at the end of every billing cycle, you might be charging more to your credit card than you can afford. It could be a good idea to cover your everyday expenses with cash or a debit card until you get your credit card debt paid off.
Once you are no longer making monthly payments on your debt, you’ll have a little more financial wiggle room—and you might even have a little more spending money every month. Consider it one more reason to learn how to pay off credit card debt fast.
Pay off your balance transfer before the intro APR period expires
Whenever possible, try to pay off your transferred balances before your balance transfer credit card’s intro APR period expires. What happens when your 0 percent interest rate ends? Any remaining balance on your credit card will begin to accrue interest at the regular interest rate—which means you can save money by paying off your balance transfer before your credit card issuer begins charging interest on your transferred balance.
Remember, the best balance transfer credit cards offer 0 percent intro APR rates that last at least a year. While some 0 percent APR cards apply an intro rate only to purchases and some offer 0 percent for a limited time on balances, still others have intro APRs for both transferred balances and new purchases. So make sure you know which kind of balance transfer card you have.
Once you understand how your 0 percent intro APR rate works and how long it lasts, do your best to pay off your outstanding balances before your intro APR period expires. Not only will this method help you pay off credit card debt fast, but it can also help you save a lot of money in interest charges.
The bottom line
Paying off credit card debt isn’t easy—but a balance transfer credit card can help you consolidate your debt, save money on interest and prioritize debt repayment. This is one of the best ways to pay off credit card debt, especially if you make a plan (and a budget) that allows you to pay off your debt before your balance transfer credit card’s 0 percent intro APR period expires.