Editor’s Secret Trick to Eliminate Debt

If you’re currently carrying a balance and watching interest charges eat away at your progress, many advisors recommend moving your debt to a 0% intro APR credit card, but there is a problem…

What They Don’t Tell You..

Although paying zero interest for 12 to 24 months would be a great advantage in getting out of debt, transferring your credit card debt from a high-interest card to a zero-interest card isn’t free. Zero-interest credit card companies typically charge from 3 to 5 percent for the privilege of transferring your debt. So let’s look at the numbers for a minute.

Let’s suppose you have $10,000 of debt on a card charging 24% annual interest. That means that every year you are paying $2,400 in interest before you even make a dent in the principal. That is ridiculous!  That 24% is equivalent to 2% a month, or “only” $200/mo. which sounds better, but isn’t good at all ($200 x 12 = $2,400).

Now, if you transfer the debt and the company charges zero interest, but still charges a 4% transfer fee, the new company just got the equivalent of two months’ interest up front, or $400.

What to Do Instead

Instead of transferring the balance and paying a fee, here is a little-known trick to transfer the balance for free. Suppose you have $10,000 debt on Card 1 and you normally spend another $5,000 a month. You typically send Card 1 $200 in interest, plus $200 toward principal reduction (the minimum Payment). Once you get the new card, simply charge absolutely all new expenses (i.e. $5,000) on the interest-free card and use the money you would have spent on those payments to pay off the old card.

So, at the end of month one, your balance on the new card is $5,000, and on the old card is $10,000. But you have the $5,000 that you would have spent available to pay down the debt in addition to your regular $200 in interest, and $200 principal reduction. After the first month, you will have a $4,800 balance on card 1 and a $5,000 balance on the new card, but you will only owe $100 in interest instead of $200. The next month, you do the same, and your old card is paid off, and your new card has the $10,000 debt on it. Beware of when your first payment on the new card is due. Even though it is “interest-free,” you are still required to make the minimum payment (which directly reduces principal). Now you have some interest-free breathing room.

At this point, you commit to really paying off the debt.

1. Destroy the old card- cancel it if it has an annual fee.
2. Pay as much as possible toward the new card, at least the $400 you were already paying (since there is zero interest, it will all go toward reducing the debt).
3. Pay off all new expenses immediately. If you can’t pay them off every month, don’t spend it.

If that is all you do, after 18 interest-free months, you will have reduced your debt by $400 x 18 =  $7,200, and if you work at it a little, you can be debt-free in 18 to 24 months. If the new card gives you a $200 sign up bonus, use that to further reduce the debt. Your $10,000 debt is now $2,600.

Many cards also offer cash back on your purchases and allow you to apply it to the card balance with a couple of clicks. If your purchases only earn 1% cash back (some purchases earn up to 5% cashback), but 1% of $10,000 is another $100 toward paying off the debt.

Pro-Tips

1. Put every extra cent you can find toward paying off the debt.
2. Vow to reduce your lifestyle for 18-24 months to get out of debt.
3. DO NOT use the extra credit to get into more debt!!!
4. Sell stuff you don’t use to reduce your debt even faster.
5. Learn to use debt wisely.
6. Some cards give you $100-$200 bonus cash if you charge a certain amount within the first 3 months. (Use that cash to pay down the debt).
7. Make sure the card you apply for has zero interest and no annual fee.
8. Pick the card with the best cashback benefits based on your spending patterns.

Here are some cards that offer interest-free rates and may offer a sign-up bonus:

Note: If you apply as our “friend” in addition to you getting a bonus, we may also get a bonus, and you will help support this site (and we will really appreciate it)!

Note #2: Terms may vary depending on the card you are approved for. Note: If you sequentially use all four of these cards, you will collect an extra $700 that can be applied toward your bills. Don’t apply for them all at once, since they typically require you to charge a certain amount within a certain time in order to qualify for the bonus payment.

	Editor’s #1 Choice: 0% introductory APR for the first 15 months that your account is open. Capital One also offers unlimited “Virtual Cards” tied to your real card (this is really my absolute favorite feature, I use it all the time), it allows me to turn a virtual card on and off, independent of the actual card. So if I make an online purchase, I always use a Virtual Card and then turn off the virtual card immediately after the purchase goes through, so it can’t be used again by that company. The virtual card already prevents any other company from using it. This feature saved my bacon when buying from Temu a while back. First, Temu charged my virtual card as planned. Then half a dozen hackers tried to charge it, but were declined because they weren’t Temu. Extra Bonus: No hassles regarding unauthorized charges, plus I didn’t have to get a new card because my card was hacked. I just deleted that virtual card. This also helps for companies that automatically charge your card at a later date, like subscriptions. By turning the virtual card off, it forces the company to ask you before they renew because the card has “expired”. It is worth getting the Capital One Card just for this feature. You can also schedule when that individual virtual card “expires”, so if you want additional charges to be allowed for a year and then stop, you can set that as well. It has a manager list of all your virtual cards, so you can reactivate a card the next time you want to buy from a particular company and then turn it off again when you are done.	$0 (zero) Annual Fee — Transfer Fees (3%-4%)	$200 Bonus Friend Application
	0% introductory APR for the first 15 months that your account is open. INTRO OFFER: Unlimited Cashback Match for all new cardmembers. Discover will automatically match all the cash back you’ve earned at the end of your first year! 5% cash back on everyday purchases like gas and groceries, 1% cash back on all other purchases.	$0 (zero) Annual Fee — Transfer Fees (3%-5%)	$100 Bonus Friend Application
	0% introductory APR for the first 15 months that your account is open. 1.5–5% cash back depending on category. You cannot get the signup bonus if you received one for the same card within the last 24 months.	$0 (zero) Annual Fee — Transfer Fees (3%-5%)	$200 Bonus Friend Application
	This one is a little different. It doesn’t offer a special intro APR, so it won’t work to reduce your debt. But, just like the other cards, no interest is charged if the balance is paid in full each month. So, what is the advantage? It is tied to a Crypto Account, so it pays rewards in the cryptocurrency of your choice, including BTC, ETH, SOL, and about 90 others. Plus, you get Rewards every month: 4% crypto back – on gas, EV charging, transit, rideshare, 3% crypto back – on dining, 2% crypto back – on groceries, 1% crypto back – on all other purchases. Once you have your debts paid off, this is a painless way to build a crypto portfolio. The card itself is also really cool; it is made of metal instead of plastic, so it doesn’t feel flimsy. I love the feel of this card and the fact that it automatically builds a crypto portfolio, especially now when Crypto is cheap. Also, it pays $200 in crypto if you spend $3,000 within the first 90 days. Just be sure to pay off your entire balance every month to avoid interest charges!	$0 (zero) Annual Fee — Attached Crypto Account	$200 Bonus Friend Application