What’s the fastest, most simplest way to pay off credit card debt?
The answer is astoundingly simple. The best part of this strategy is that it takes advantage of credit card companies’ marketing strategy and makes it work for you. This plan will reduce your payments, pay down debt faster, and improve your credit.
Step 1: Save Thousands By Stopping Your Interest Payments
First recognize you have to stop paying interest. If you keep paying interest, you’ll make little progress towards paying off your debt.
For example, if you owed $10,000 credit card debt and paid $250 a month:
- $177 of your $250 payment would go towards paying interest. That’s $177 of your payment pocketed by the credit card company for free!
- Only $73 (29%) goes towards paying down the $10,000 principal.
- At this rate, it would take 69 months to pay off your debt, and it would cost you a staggering $7,535 in interest!
This is an uphill battle you simply can’t win. You need to stop paying interest ASAP.
How do you legally stop paying interest?
Find a credit card with a 0% introductory balance transfer APR offer that lasts until at least 2018 (see my recommendations below for the best card). Thanks to the recovering economy, banks have been offering the best promos and longest 0% APR intro periods I’ve seen since before the financial crisis in 2008.
Apply for a card and immediately transfer all your credit card debt to the new card. By eliminating interest for 18 months, you can pay off the entire $10,000 debt two years faster and save $6,006 in interest!
Step 2: Develop Your Payment Plan
Take your credit card debt and divide it by number of months in your 0% introductory balance transfer APR period. For example, say you owe $5,000 and got an 18-month 0% APR balance transfer card. Your monthly payment should be $277:
$5,000 / 18 months = $277 monthly payment.
That is still a big payment. But at least you are no longer paying interest, 100% of your payment goes towards paying down your debt.
But even if you can’t swing that amount, start by getting a 0% APR card and paying more than the minimum every month. The new card will give you a huge head start on eliminating the entire $10,000 debt. Check out this chart to see how you’d save $3,298 in two years by using a card with a 0% intro APR for 18 months.
Stop Procrastinating: Get Started Now
Every day you wait adds more interest to your debt. If you’re reading this article right now it means you’re serious about paying off debt. Act now and take advantage of your current momentum.
The first small task is to find the right 0% balance transfer credit card. It will only take a few minutes since I’ve already done the research for you. After researching hundreds of credit cards, I found the best cards for paying off debt:
The Ultra-Long 0% Intro APR Card
BankAmericard® Credit Card
18 billing cycles (months) of 0% intro APR. No annual fee.
- Good for: People who want to avoid interest payments for a long time to help pay off their debt.
- Credit needed: Excellent.
- Why this is my first pick: If you need a really long payment period, this is the card for you. And if you can’t pay off the whole balance in 18 months, the regular APR is the lowest available on this list.
The $150 Sign-Up Bonus Card
Wells Fargo Cash Wise Visa® Credit Card
12 months 0% APR. Unlimited 1.5% cash back. No annual fee.
- Good for: People who have a smaller balance to pay down (only need 12 months 0% APR), and want to get a sign-up bonus and cash back rewards.
- Special features: Get up to $600 in cell phone protection, so you don’t have to worry about dropping or losing your iPhone. If you use Apple or Android Pay, you get a higher 1.8% cash back rate.
- Why this is on my list: This card is great for people who want cash back, but don’t want to worry about different categories of purchases offering different cash back rates.
The No Balance Transfer Fee Card
Chase Slate®
Save with a $0 introductory balance transfer fee, 0% introductory APR for 15 months on purchases and balance transfers, and $0 annual fee. Plus, receive your Monthly FICO® Score for free.
- Good for: People who have a big balance to transfer. Avoiding the typical 3-5% fee saves $300-500 on a $10,000 balance transfer.
- Credit needed: Good. If you have late payments, this is probably your best bet on this list.
- Why this is on my list: This is the only card that doesn’t charge a balance transfer fee (if you transfer within first 60 days).
The High Cash Back Card
BankAmericard Cash Rewards™ Credit Card
$100 sign-up bonus. 12 billing cycles 0% intro APR. Earn cash back rewards.
- Good for: People with less than $5,000 in credit card debt and would like to earn cashback rewards.
- Pro: $100 sign-up bonus. 1% cashback on all purchases. 3% on gas and 2% at grocery stores and wholesale clubs.
- Why this is on my list: In addition to offering a 0% intro APR, this card is a great day-to-day card for earning the most cash back on gas and groceries.
