These Credit Cards Can Actually Help You Get Out of Debt Faster

Credit card interest rates are the highest we've seen in years, with a national average APR of about 24% as of Sept. 2023. This has made the cost of credit card debt even more expensive, and with the average credit card debt among cardholders with unpaid balances sitting at $7,279, it has caused a financial burden for many American households.

Although rates have risen sharply, it might come as a surprise that 0% intro APR offers on balance transfers are still as abundant as ever. There are some excellent credit cards on the market with 0% intro APR offers for as long as 21 months. And in many situations, they can be an excellent financial tool to help you get out of credit card debt once and for all.

Why a balance transfer could help you get out of debt faster

I'll try to keep the math lesson to a minimum, but it's important to illustrate just how much you could save by using a balance transfer credit card to pay off your debt.

Let's say that you have $10,000 in credit card debt at an average interest rate of 24%, the current approximate national average. This means that you are accumulating interest at a rate of $200 per month. If you pay $500 towards your credit card balance this month, just $300 of it will be applied towards the principal.

Now, let's say that you pay $500 per month until it's paid off. At a 24% interest rate, it will take you 26 months to pay it off, and you'll pay about $2,900 in interest in the process. On the other hand, if you use a credit card with a 21-month 0% intro APR period for balance transfers, you'll pay off the entire debt in 20 months, and you won't pay a penny in interest.

Excellent offers still exist

As mentioned, even though interest rates have risen, there are some great balance transfer offers available.

Just to name a couple of examples, the Wells Fargo Reflect® Card offers 0% intro APR for 21 months from account opening on both balance transfers and new purchases (see rates and fees). The go-to 18.24%, 24.74%, or 29.99% Variable APR applies once the intro period ends, and the card charges a balance transfer fee of 5%, min: $5.

Alternatively, the Citi Double Cash® Card offers a 0% intro APR for 18 months on balance transfers. The go-to 19.24% - 29.24% (Variable) APR applies at the end of the intro period. And while it doesn't offer the same deal on new purchases, it offers 2% total cash back on all qualifying purchases. These are just two of several examples, but the point is that offers like these are still out there.

Things to keep in mind

Like any financial product, a 0% intro APR balance transfer isn't perfect. There are a few things to be aware of.

First, a balance transfer credit card will have a time limit, and you need to make sure you'll be able to pay the principal off before the introductory period expires. Since 100% of your payments will go towards the principal, an easy way to figure out how much you'll need to pay each month is to divide the transferred balance by the number of months in the 0% intro APR period to make sure it's an amount you can handle. If you aren't confident you can repay the debt before the introductory period expires, you might want to consider consolidating debt with a personal loan instead, which can have a significantly longer repayment term.

Second, balance transfers usually have fees. They aren't free. The industry standard balance transfer fees range from 3% to 5% of the amount you're transferring, so on a $5,000 balance transfer, you should expect $150 to $250 in fees added to the new card. To be sure, a 3% to 5% fee is certainly preferable to paying 24% interest, but it's important to know it's there.

Third, it's important to point out that a balance transfer is only an effective method of debt reduction if you don't start accumulating balances on your other (interest-charging) credit cards again. After all, a balance transfer credit card does increase your available credit line, and it can be easy to get in trouble if you don't watch your credit card spending after your balance transfer is complete.

A smart financial tool when used correctly

Balance transfer credit cards aren't ideal for every situation, but if used responsibly, they can help you pay off your credit card debt in a shorter amount of time, while potentially saving thousands of dollars in interest. Give it some thought to decide if one might be right for you.