Using 0% Cards to Dig Out of Debt

The average American has $6,354 in credit card debt.* (Can footnote Experian)  If you, like many Americans, are paying the standard purchase rate, often near 18%, on this debt you are paying over $1,100 in interest annually to the banks. 

The good news is that if you have been making your payments on time you likely have a good credit score.  If you have a good credit score, banks are competing for your business and the balance you carry.  This means that banks are willing to offer you 0% on the balances you have if you open a new credit  

card with them and transfer the balance over.  

Think about that, you can pay 0% just for receiving a new credit card.  Please take advantage of what paying your bills timely has allowed you, the chance to avoid over $1,100 in interest annually. 

What are 0% APR cards?

A 0% APR card is a credit card offer that includes an introductory period where interest will not be charged on balance transfers, purchases, or both. Usually, these offers come with several terms, including: 

  • What types of transactions fall under the offer:Some cards apply the offer only to balance transfers while others provide for interest-free purchases. 
  • How long you have to take advantage of the offers: Balance transfers typically have to be completed in the first few months of opening the new card. 
  • How long the interest-free period lasts: Introductory periods, where interest isn’t charged on the balance, typically range from 12 to 24 months. 
  • Whether it’s delayed interest: Delayed interest means if you don’t pay off the amount before the introductory period is over, you could be hit retroactively with “back interest” on the remaining balance. 

How do 0% APR cards help with debt?

While it is straightforward to understand that not paying interest is a savings, it is important to understand how the process works.  We are here to help 

  1. Read the terms and conditions, balance transfers fees can range from 0% to 5%, you need to be prepared for any charge 
  2. Choose the credit card you want, the could be the one with the longest 0% duration, lowest fee, or it could offer a nice cash back bonus when opening the card 
  3. Apply online through the link, make sure to list the cards with balances you want to transfer to the new card.  This has multiple benefits 
    • The balance will move to 0% as soon as possible 
    • Banks want to win balances from other banks 
    • Banks might adjust credit line upwards to bring over all of your business 
  4. Make all payments on time, late payments may trigger an end to the 0% or a late fee 
  5. Enjoy the fact that every cent of every payment made lowers your balance 

We cannot emphasize point #5 enough.  if you make a $100 payment each month for 18 months on an 18 month 0% interest card, you will pay down $1,800 in debt.  The $6,300 balance will be reduce to $4,500.   

There is a great opportunity to take advantage of how the banks compete to get yourself out of debt.  We will help you through the process.