Our credit card articles, reviews and ratings maintain strict editorial integrity and are independent of whether a card is an advertiser (they are neither commissioned by nor reviewed, approved or endorsed by issuers); however we may receive compensation through the issuer's affiliate programs when you click on links to products from our partners and get approved. See details on how we make money here.
Today I want to show you how to use balance transfer credit cards to consolidate debt. I did this for four years and it saved me thousands in interest. It’s not difficult, but you do need to find a good credit card with a promotional rate for balance transfers.
It’s been almost four years since I paid off my last credit card debt bill. I was in over $50,000 on credit cards and had $75,000 total debt to my name. I was struggling, but took a balanced approach to get out of debt and I’m better for it today. One of the main factors that helped me get out of debt was understanding where I stood with all of my debts and coming up with a plan to pay it all off. I was in my debt repayment stage for four years, so this year is a little milestone for me. I’ve been credit card debt free for the same amount of time as it took me to pay it off. That’s exciting!
You’re probably wondering from the title why I would talk about credit cards as a way to pay off debt. It might seem strange, but first hear me out. While I had a lot of credit card debt, I also strategically used new credit cards to lower my interest rates and save money along the way. I will also note that I use credit cards to this day. In fact, all of my purchases are done on credit and I pay it off every month. I never hold a balance. I’ve changed my money mentality and understand what got me into debt in the first place. So, let’s see how I did this and hopefully you can do it as well.
I call my process the “balance transfer game” because you are basically using credit cards that provide you with a good balance transfer rate to reduce your overall interest rate. Hopefully, you can find one that gives you 0% for a number of months. This is how I reduced the amount of interest I paid and it was significant. I would say the amount was nearly $5,000 in interest saved by using credit card balance transfers. This is similar to debt consolidation, but you don’t have to go through any program to do it. It’s a debt consolidation plan on your own terms.
Using credit cards to reduce your overall interest is very easy. You find a good balance transfer credit card and apply. I have excellent credit, so doing so was very easy for me. Make sure to check your credit score before doing so. If you have bad credit, this game will be harder to accomplish, but still can be done.
Once you get approved for a new balance transfer card, you transfer the balance of your highest interest credit card. Hopefully you can get it all transferred, but if not, then transfer as much as you can. Every card has a promotion with it, so you can get 0% interest for 12, 18, or even 21 months with some cards. You need to pay attention to that promotional period. It’s even better if you don’t have to pay a transfer fee, but there are only a few cards that offer such a promotion.
You have to pay off the credit card within the promotion time frame. If you don’t , then you will start to be charged interest on the balance. When I was paying off debt, you would be charged interest based on the original transfer balance, but I’m not sure if they still do that. Each bank is different. If you can’t pay off the card within the promotional period, then you go out and find a new balance transfer promotional card and do the process all over again. You can’t use the same bank as they don’t typically allow for balance transfer promotions between two cards.
The important thing to remember is you need to be able to use credit cards to lower your overall interest rate. Basically, you take the promotional period 0% interest (if you can get it) and transfer your high-interest balances over. This negates the old interest rate and reduces your rate to zero. You then pay that balance off and all the money you throw at your balance goes toward paying it off. None goes to interest. This is effectively debt consolidation by bringing your debts to one card and paying it off. While it’s not a real consolidation program, that’s how I did it and was very successful.
I did this for my entire four years of paying off debt. I got a total of four cards to run the game and then cancelled the one I didn’t need anymore. Don’t cancel your paid off credit cards as they have history with them and that makes up your credit score. You can easily cancel the new balance transfer credit card and be OK.
You might think this is crazy, but it really does work. Credit cards are just financial tools. They don’t get you into debt or out of it. We do that, but we can still use them to our advantage. If you don’t think you can handle moving balances around to different credit cards, then I DON’T ADVISE DOING THIS. Just stick with the classic pay off your debt as you go. Just pick the snowball or avalanche and move on. If you think you can swing it, then here are the best balance transfer credit cards on the market today.
First off, you want to use these card for debt consolidation. It’s important to note that most of the cards have a balance transfer fee associated. Please do the math to make sure the savings will be bigger than the fee. There is no point to transfer a balance if the fee is going to wipe out your savings. If you have a high-interest card, then most likely the 3% fee (this is a standard fee) is not going to wipe out your savings, but still take the time to do the math. That’s the whole point of debt consolidation!
To be completely honest, if you don’t have fair to excellent credit, these recommendations might not be for you. It’s much harder to find a good balance transfer offer when you have bad credit. While credit cards do exist for those with bad credit, they often aren’t that good or don’t provide you with many perks. If you want a balance transfer card and you have bad credit, you may need to work on getting your credit score up and find a secured credit card.
This card is probably the best out there for balance transfers. The reason is two-fold really. One, this is the rare card right now that has zero fee when you do a balance transfer. You have to do it within 60 days of opening the card, otherwise there is a fee. Secondly, and on top of that, you get 15 months at 0% interest on balance transfers and purchases to use.
This is perfect to consolidate debt from other high-interest credit cards. There is no annual fee to have/keep this card, but it does require good to excellent credit. It has been named the “Best Credit Card for Balance Transfers” by MONEY Magazine for three years in a row.
Interestingly enough, this was the card I used to start my self-imposed debt consolidation. The reason is it has among the longest promotional periods for a balance transfer. You can get 21 months of 0% interest on this card. They do have a fee of $5 or 3% of the transfer amount, whichever is bigger. There is currently no annual fee.
You get free access to your FICO score with this card as well, but all of the offers here provide that now. The one caveat is you need excellent credit to apply for this card. The reason is it has a long balance transfer promotional period. 21 months is among the longest right now and Citi has it. I’m glad to see this card still ranking at the top for balance transfers considering I got it back in 2009!
The Discover it®- 18 Month Balance Transfer Offer still has the perks of a Discover card, like rotating 5% cash back categories and $0 fraud protection, but the 18 months of 0% interest is nice. The good thing about this card is you can get it even with fair credit. You can try to apply with bad credit, but approval will be discretionary. Though they say excellent credit is needed, I’ve seen otherwise with people applying.
This card has no annual fee and the APR rates are competitive. The 5% cash back rotates categories every quarter, so you just have to pay attention to their emails and mailings. There is a fee for balance transfers at $5 or 3%, whichever is higher.
Add another Citi card to the mix. With the Citi Double Cash, you get 15 months of 0% interest on purchases and balance transfers. That’s a good amount of time to use it for debt consolidation. There is no annual fee and the APR rates are competitive. There is a fee for balance transfers at $5 or 3%, whichever is more.
This card does reward you with cash back in a different way than other cards. You get 1% back with every purchase, but then you get 1% back when you pay off that purchase, either all at once or over time. Effectively, you can get 2% back on all purchases. You need good to excellent credit to apply for this card and the APR rates are competitive.
Another Citi card and another one with 21 months of 0% interest on purchases and balance transfers. There is also a fee for transfers of $5 or 3%, whichever is greater. This is pretty typical for balance transfer credit cards. The APR rates are competitive with other cards and similar to other Citi card for sure.
You will need good to excellent credit to apply. What makes this card special is there is no annual fee, no late fees, and no penalty rates. They don’t add on fees to your account and that’s why it’s on this list. Accompany that with the 21 months balance transfer promo, this can be a great card to add if you want to consolidate your credit card debt.
While there are other great balance transfer credit cards out there, these are the ones I recommend to use for debt consolidation and paying down your overall credit card debt. You use these awesome promotional rates to reduce the amount of interest you pay and throw as much as you can toward your debt to pay it down. Remember, when the interest rate is 0%, then all money you pay goes toward the balance. That’s how you can reduce your debts with credit cards. Crazy huh?
*Important note… please don’t use credit cards for debt consolidation if you can’t keep your spending under control. You’ll never get out of debt if you just transfer balances and then use the paid off card again to rack up more debt. Using balance transfer credit card promotions is for those who are disciplined and ready to get out of debt. It’s possible and I’ve done it.
If you’ve used credit cards to transfer a balance, what is your favorite card?