How to use a 0% balance transfer credit card for debt consolidation

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For consumers with high-interest debt to pay down, zero-interest debt consolidation can make a ton of sense. After all, a balance transfer credit card that gives you zero interest for a year or longer lets you chip away at your debt without any of your payments going toward interest charges. This means you can save money over the course of your repayment timeline and pay down debt faster.

Fortunately, saving money with a balance consolidation isn’t that hard, nor does it take a lot of time. This guide aims to explain how you can consolidate credit card debt for savings and convenience, as well as highlights the top balance transfer credit cards that can make it happen.

How to consolidate debt with a balance transfer credit card

Debt consolidation with a balance transfer credit card may only take a few minutes, yet the impacts of this move can last for a lifetime. The following steps can help you move forward with the debt consolidation process:

Step 1: Make a list of your high-interest debts

The first step to debt consolidation is figuring out how much debt you have. It’s a good idea to make a list of all your credit card balances and other high-interest debts with separate columns that include your balance owed, your monthly payment and the current interest rates being charged.

With a full list of the debts you want to consolidate, you should have a better idea of your total debt load and how long it will take you to pay it off.

Step 2: Compare balance transfer credit cards

Next, up, look for balance transfer offers that can work for your goals, keeping in mind that balance transfer credit cards with longer 0 percent intro APR timelines may be needed if you have a considerable amount of debt to pay off. You may want to run some basic numbers to see how much you might be able to pay down during the standard timelines you’ll typically get a 0 percent APR for. For example, if you owe $10,000 in high-interest balances and you are looking at balance transfer cards that give you zero interest for 18 months, you may want to ask yourself if you can afford to pay the $556 per month required to pay down all your debts during that timeline.

At the very least, you should look for balance transfer offers that are long enough to pay down as much debt as possible. In the meantime, you’ll want to compare cards based on the rewards and cardholder perks they offer, as well as the balance transfer fees they charge.

Step 3: Apply for a new card, then transfer your balances

Once you find a balance transfer credit card you are excited about, you can take the steps required to apply online. Typically, this involves sharing personal information like your name, address, Social Security number, income and employment situation. Also, note that you’ll need good or excellent credit to qualify for the best balance transfer credit cards on the market today.

Once you apply, you may be able to enter information on the balances you want to transfer online. In this case, you’ll share any details they ask for, such as the credit card account numbers, balance amounts you want to transfer and the mailing address of each issuing bank.

If you don’t want to set up your balance transfers online, you can do so over the phone by calling the number on the back of your new balance transfer credit card.

Step 4: Make sure the transfer is fully executed

Finally, keep in mind that it may take up to 21 days for all your balances to be transferred away from your old credit cards and onto your new one. In the meantime, make sure you continue making any required payments on your old cards and monitor your accounts until your old cards show a $0 balance.

Once your balances are transferred to your new credit card, you can move forward with your debt payoff plan at 0 percent APR.

Choosing the right balance transfer credit card for you

While all the best balance transfer cards offer zero interest for a limited time, their terms vary. Here are the features you should consider as you look for the best option to consolidate credit card debt:

  • Compare 0 percent APR timelines: Some balance transfer credit cards let you enjoy a 0 percent APR for longer than others. Make sure to select a card that lets you pay down debt with zero interest for as long as possible.
  • Look at balance transfer fees: Balance transfer credit cards charge an upfront fee when you consolidate debt, and these fees typically range from 3 percent to 5 percent of your transferred balances. Ideally, you’ll find a card with a balance transfer fee on the lower end of that range.
  • Consider rewards and cardholder perks: Keep in mind that some credit cards offer rewards on your spending and cardholder benefits like insurance, purchase protection against damage or theft and extended warranties.

Best balance transfer cards for 2021

As you get ready to transfer balances so you can consolidate credit card debt, you’ll want to compare all the best credit cards in this space. The following balance transfer credit cards offer long introductory 0 percent APRs or rewards and other perks:

U.S. Bank Visa® Platinum Card: Longest 0 percent APR offer

The U.S. Bank Visa® Platinum Card doesn’t offer any rewards, but you do get the longest 0 percent APR offer on the market today. In fact, this card gives you 20 billing cycles with an intro 0 percent APR on purchases and balance transfers, followed by a variable APR of 14.49 percent to 24.49 percent.

There’s no annual fee, and you can qualify for benefits like the ability to pick your own payment due date, online account access and cell phone protection coverage when you pay your phone bill with your credit card. Note that a 3 percent balance transfer fee (minimum $5) does apply.

Citi Simplicity® Card: Best for debt consolidation

The Citi Simplicity® Card is popular for debt consolidation thanks to the fact it offers an introductory 0 percent APR on purchases and balance transfers for 18 months, followed by a variable APR of 14.74 percent to 24.74 percent. There’s no annual fee, and you’ll get perks like the chance to pick your own due date and automatic account alerts. If you use this card for debt consolidation, you’ll pay a balance transfer fee of 3 percent (minimum $5).

Citi® Double Cash Card: Best for rewards

The Citi® Double Cash Card is unique among balance transfer credit cards since it also offers a generous rewards rate on your purchases. Once you sign up, you’ll earn a flat 2 percent back on everything you buy—1 percent when you make a purchase and another 1 percent when you pay it off. You’ll also get an introductory 0 percent APR on balance transfers for 18 months, followed by a variable APR of 13.99 percent to 23.99 percent.

Be aware that you’ll only earn the full cash back on your spending if you pay your bill on time, and that balance transfers do not qualify for cash back. Also, note that a 3 percent balance transfer fee (minimum $5) applies if you use this card to consolidate credit card debt.

Other options for consolidating debt

When it comes to balance consolidation for the sake of saving money or getting out of debt faster, know that balance transfer credit cards are only one tool to consider for your arsenal. There are plenty of other financial products you can use for debt consolidation, although your options will be the most plentiful if you have assets to use as collateral, an excellent credit score or both.

Financing with a low-interest loan

For example, home equity products like home equity lines of credit (HELOCs) and home equity loans are popular for debt consolidation. Interest rates tend to be low for home equity loans since they are secured by the underlying asset’s value (your home’s value), yet you should know you could lose your home to foreclosure if you stop making payments on a home equity loan or a HELOC.

Low-interest personal loans are another popular option for debt consolidation since they are just as easy to qualify for but are unsecured, meaning they do not put your collateral at risk. Personal loans also let you pay down debt with a competitive fixed interest rate, a fixed monthly payment and a fixed repayment timeline. This puts low-interest personal loans at an advantage over balance transfer credit cards since the low rates last for the entire loan timeline, which can easily be two to seven years (and sometimes longer).

Personal loans can also be a good option for debt consolidation due to their high loan amounts. With some lenders, you can borrow up to $50,000 or more for debt consolidation, then pay it down with an APR as low as 3 percent depending on your credit rating.

The bottom line

Debt consolidation can help you save money and get out of debt faster, but you should research all the best options before you move forward. It’s possible a balance transfer credit card might give you enough time to pay down all your debt at an introductory 0 percent APR, yet those with more debt to pay off might want to consider a low-interest loan with a longer repayment timeline.

Either way, it’s always best to get serious about your debts sooner rather than later. With the right tools and attitude, you can begin your journey away from debt and toward the life you really want.

The information about the U.S. Bank Visa® Platinum Card and Citi Simplicity® Card has been collected independently by Bankrate.com. The card details have not been reviewed or approved by the card issuer.