If you have credit card debt, you're not alone: Americans owe a record $1.08 trillion on their cards,according to credit reporting agency Experian, with the average balance pushing past $6,300.
Carrying a large balance increases your debt burden, hurts your credit score and negates any benefits you're getting from your card's rewards plan. And with credit card interest rates at historic highs, it can be harder than ever to get out from under.
Below, CNBC Select reviews the best ways to chip away at your credit card bills, whether you've got one card or a walletful.
What we'll cover
- Using a balance transfer credit card
- Consolidating debt with a personal loan
- Borrowing money from family
- Paying off high-interest debt first
- Paying off the smallest balance first
Using a balance transfer credit card
You can avoid crushing interest rates by transferring debt from high-interest cards to a balance transfer credit card that has zero interest for up to two years.
If you want a long time to pay off your debt, the Citi Simplicity® Card offers a 0% intro APR for 21 months and a 3% intro fee when you transfer within the first four months of opening your account. After the introductory period, there's a 19.24% - 29.99% variable APR on balance transfers.
Citi Simplicity® Card
On Citi's Secure Site
Rewards
None
Welcome bonus
None
Annual fee
$0
Intro APR
0% Intro APR for 21 months on balance transfers from date of first transfer and 0% Intro APR for 12 months on purchases from date of account opening.
Regular APR
19.24% - 29.99% variable
Balance transfer fee
There is an intro balance transfer fee of 3% of each transfer (minimum $5) completed within the first 4 months of account opening. After that, your fee will be 5% of each transfer (minimum $5).
Foreign transaction fee
3%
Credit needed
Excellent/Good
See rates and fees. Terms apply. Read our Citi Simplicity® Card review.
Another option is the Wells Fargo Reflect® Card, which charges 0% APR for 21 months on purchases and qualifying balance transfers made within 120 days of opening the account, then18.24%, 24.74%, or 29.99% variable APR thereafter. Balance transfers made within 120 days from account opening qualify for the intro rate, BT fee of 5%, min $5.
Wells Fargo Reflect® Card
On Wells Fargo's secure site
Rewards
None
Welcome bonus
None
Annual fee
$0
Intro APR
0% intro APR for 21 months from account opening on purchases and qualifying balance transfers.
Regular APR
18.24%, 24.74%, or 29.99% Variable APR
Balance transfer fee
5%, min: $5
Foreign transaction fee
3%
Credit needed
Excellent/Good
See rates and fees. Terms apply.
There are some limitations to this strategy: Balance transfer cards typically set caps on the amount you can transfer and you can't transfer a balance between cards issued by the same bank. In addition, you'll need a FICO credit score of at least 670, which is considered good or excellent.
Make sure to read the fine print before you apply for a transfer.
Consolidating debt with a personal loan
If you don't want to add another credit card, a personal loan provides you with cash over a fixed period and usually with a fixed interest rate that's lower than a credit card APR.
Depending on your credit score, you may qualify for a loan that covers your entire credit card debt. And if your debt is spread out across several cards, consolidating it into a personal loan will be easier to manage.
CNBC Select ranked Happy Money as one of the best options for a personal loan, with an APR of 11.72% to 24.67%. If you don't have a great credit history, applicants only need a fair credit score — 580 or above — to qualify for a loan.
Happy Money
Annual Percentage Rate (APR)
11.72% - 17.99%
Loan purpose
Debt consolidation/refinancing
Loan amounts
$5,000 to $40,000
Terms
2 to 5 years
Credit needed
Fair/average, good
Origination fee
0% to 5% (based on credit score and application)
Early payoff penalty
None
Late fee
5% of monthly payment amount or $15, whichever is greater (with 15-day grace period)
Terms apply.
An attractive option if you're trying to pay off high-interest credit cards, LightStream offers APRs as low as 7.49%. You will need a FICO credit score of at least 670, but LightStream doesn't charge late or origination fees.
LightStream Personal Loans
Annual Percentage Rate (APR)
6.99% - 25.49%* APR with AutoPay
Loan purpose
Debt consolidation, home improvement, auto financing, medical expenses, and others
Loan amounts
$5,000 to $100,000
Terms
24 to 144 months* dependent on loan purpose
Credit needed
Good
Origination fee
None
Early payoff penalty
None
Late fee
None
Terms apply. *AutoPay discount is only available prior to loan funding. Rates without AutoPay are 0.50% points higher. Excellent credit required for lowest rate. Rates vary by loan purpose.
Borrowing money from family or friends
If your credit score is below 580, you may have a hard time qualifying for a balance transfer card or personal loan.
If you're thinking of asking a family member or friend for a loan, make sure you set up a repayment plan before borrowing any money. And stick to it like you would a bank loan so you don't risk damaging your relationship.
Paying off high-interest debt first
If you have debt across multiple cards, it's a good idea to use the avalanche method — where you pay off the balance on the card with the highestinterest rate first, then work your way through the rest from highest to lowest APR.
You can also combine techniques by opening a balance transfer card with a 0% introductory APR. Polish off any lingering balances on your high-interest cards first and pay the minimum on your balance transfer card.
After the high-interest card is paid off, tackle your balance transfer card more aggressively.
Similarly, if you've consolidated debt with a personal loan or by borrowing from family or friends, prioritize paying off high-interest balances first.
Paying off the smallest balance first
Then, there's the snowball method of debt repayment, which involves paying off the card with the smallest balance first and working your way up.
The theory is that zeroing out a card balance provides a sense of accomplishment and encourages continued debt management. Financial advisors usually don't recommend the snowball method because it can result in more interest charges compared to paying off high-interest cards first.
At the end of the day, the most important thing is to create a debt repayment plan you can stick to. If paying off a card with a smaller balance in full will keep you on track in the long run, it may be the right choice for you.
If you decide to employ the snowball method, you should still makeminimum payments on your other cards.
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Bottom line
Credit cards are a necessity in today's world — and they can be an asset if you budget well and pay off your balance each month. If you find yourself buried under credit card debt, however, there are options that give you more time to pay it off with less interest.
Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of credit card products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.
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Read more
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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.
