Here’s what credit cardholders with debt can do
The following advice can help set you on the path toward solvency if you feel you’re drowning in credit card debt.
Transfer debt to a balance transfer credit card
If you’re carrying a credit card balance month to month that you just can’t pay off, your first priority should be putting a halt to the interest it’s accruing.
Credit cards by nature charge notoriously high double-digit interest and our current environment of rising interest rates only makes those APRs higher. By signing up for a balance transfer credit card, you can take that balance that is growing each day with interest and transfer it to a credit card specifically designed to give you more time to pay off that debt interest-free. And, once you can pause the interest accrual on your credit card, you can then also focus on growing your savings.
The below credit cards each offer an introductory 0% APR period for up to 21 months (and then charge an APR after that period ends) — in other words, you have almost two years to pay off your current credit card balance without any additional interest accruing. But remember to pay off your balance in full before the 0% APR period ends, otherwise you’ll face the full brunt of your card’s interest rate charges.
Wells Fargo Reflect® Card
On Wells Fargo’s secure site
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Rewards
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Welcome bonus
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Annual fee
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Intro APR
0% intro APR for 18 months from account opening on purchases and qualifying balance transfers. Intro APR extension for 3 months with on-time minimum payments during the intro period. 17.49% to 29.49% variable APR thereafter
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Regular APR
17.49% – 29.49% variable APR on purchases and balance transfers
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Balance transfer fee
Introductory fee of 3% for 120 days from account opening, then up to 5% ($5 minimum)
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Foreign transaction fee
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Credit needed
Citi® Diamond Preferred® Card
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Rewards
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Welcome bonus
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Annual fee
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Intro APR
0% for 21 months on balance transfers; 0% for 12 months on purchases
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Regular APR
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Balance transfer fee
5% of each balance transfer; $5 minimum. Balance transfers must be completed within 4 months of account opening.
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Foreign transaction fee
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Credit needed
Citi Simplicity® Card
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Rewards
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Welcome bonus
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Annual fee
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Intro APR
0% for 21 months on balance transfers; 0% for 12 months on purchases
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Regular APR
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Balance transfer fee
Introductory fee of 3% ($5 minimum) for transfers completed within the first 4 months of account opening, then up to 5% ($5 minimum).
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Foreign transaction fee
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Credit needed
It’s also smart to consider what credit card you use in your everyday life. While consumers can’t control the cost of basic expenses like groceries and gas, they can control how they pay for these things they need.
Rewards credit cards like cash-back cards may be great for your wallet, but the interest rate you’re accruing by carrying a balance is outpacing the cash-back rate you earn. If you can’t pay off your balance, you’re better off using cash or (if you must use credit) charging purchases on a card offering 0% APR on new purchases.
All the cards above offer this. Keep in mind that you’re just adding to your balance which you’ll need to pay off before the 0% APR ends.
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Consolidate debt with a personal loan
Those with credit card debt may want to also think about taking out a personal loan to consolidate their debt into one monthly payment.
This move is a particularly smart alternative to balance transfers for large amounts of debt across multiple credit cards. With a debt consolidation loan, you use the loan to pay off your credit card debt and then repay the loan in monthly installments, typically at a lower interest rate than what you would pay on your cards.
Personal loans also usually have fixed interest rates instead of variable rates you find on credit cards — meaning you’ll pay the same amount each month with a personal loan.
A few lenders to consider include LightStream, with its low interest rates and flexible terms, PenFed for those seeking smaller loans and Discover for anyone seeking fast funding. These loans also don’t have origination or early payoff fees.
LightStream Personal Loans
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Annual Percentage Rate (APR)
5.99%—23.99%* when you sign up for autopay
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Loan purpose
Debt consolidation, home improvement, auto financing, medical expenses, wedding and others
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Loan amounts
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Terms
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Credit needed
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Origination fee
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Early payoff penalty
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Late fee
PenFed Personal Loans
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Annual Percentage Rate (APR)
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Loan purpose
Debt consolidation, home improvement, medical expenses, auto financing and more
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Loan amounts
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Terms
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Credit needed
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Origination fee
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Early payoff penalty
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Late fee
Discover Personal Loans
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Annual Percentage Rate (APR)
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Loan purpose
Debt consolidation, home improvement, wedding or vacation
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Loan amounts
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Terms
36, 48, 60, 72 and 84 months
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Credit needed
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Origination fee
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Early payoff penalty
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Late fee
Bottom line
If you’re struggling under the burden of credit card debt, you’re far from alone. The best action you can take to protect your financial future is to pay off your balance in full. Using a balance transfer card or debt consolidation loan can help you climb out of the financial hole you’re in, no matter how deep it is.
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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
