Credit Cards That Help Reduce Debt

Like an oven that makes food cold, a credit card that helps reduce debt would seem like a contradiction. So while there are no credit cards that by themselves will reduce your debt automatically, there are several different types of cards that can help empower you to eliminate debt sooner.

Cards with interest free balance transfer offers

One of the obstacles to paying off debt is that you have to pay both the principal, as well as interest charges. So even when you stop making new purchases, the interest charges continue to accumulate on your existing debt, slowing down your efforts to pay it off.

However, some credit cards offer new account holders the ability to transfer their balance from their existing cards, and enjoy a limited period of interest free financing. These balance transfer offers with 0% APR promotional financing will last a minimum of six months according to the CARD Act, and as long as 21 months. During this time, no interest charges will accrue, enabling you to dedicate 100% of your credit card payments to paying down your debt.

The biggest downside to these offers is that nearly all cards will require payment of a 3% balance transfer fee, yet this cost is usually a small fraction of the interest charges that would have accrued on a balance over six to 21 months. In addition, the Chase Slate is currently the only credit card that offers 0% APR financing on balance transfers, and no balance transfer fee.

Another potential downside of these offers is that usually include interest free financing on new purchases as well. Unfortunately, some  cardholders might be tempted to utilize these offers to incur even more debt. In addition, some cardholders will see the interest free balance transfer offer as a way to postpone repayment of debt, when it should be used as a way of setting a goal of paying off debt.

Chase Blueprint

Chase is one of the largest credit card issuers in the United States, and it offers a powerful tool for reducing debt called Blueprint. Blueprint is actually a set of tools that are all designed to help cardholders take control. One feature is called Finish It, where you set a date for paying off your debt, and it tells you exactly how much you need to pay every month in order to reach that goal.

Another tool called Full Pay allows you to avoid interest by paying some charges in full while carrying a balance on others. The Track It feature allows you to view your spending history in order to see where your money is going, and to create a budget. Finally, the Split feature allows you to choose a recent purchase and decide how much of it to pay off each month, according to a plan that you create. Blueprint is a free tool offered to holders of Chase’s Sapphire, Sapphire Preferred, Freedom, Slate, and Ink cards.

Citi’s ThankYou Points

Citibank offers several cards that earn points in its ThankYou Rewards program. Once earned, points can be redeemed for a variety of awards including merchandise, gift cards, and travel reservations. Citi also offers cardholders the option of using points to repay debts including student loans and home mortgages. If the loan is not held by Citi, then Citi will actually mail cardholders a check made out to the institution that holds the loan. So instead of using their reward points to take a vacation or splurge on merchandise, cardholders can pay down their debts instead. Citi offers ThankYou points as rewards for its ThankYou Preferred, ThankYou Premier, ThankYou Prestige, and AT&T cards.

American Express Plum card

Businesses are also subject to incurring credit card debt, but thankfully there is a unique card that can help them manage it. The American Express Plum is a business charge card offers payment flexibility that can help small businesses avoid interest charges when they need a little extra time to pay off a charge. Cardholders can take up to 60 days to pay off their statement balance and not be charged interest. Alternatively, cardholders can earn 1.5% cash back when they pay their balance in full within 10 days of the statement closing. So while this card doesn’t directly help business owners to reduce their debt, it does offer a powerful incentive to avoid debt altogether. There is a $250 annual fee for this card.

Final Word

Credit card debt is very easy to create, and it can be very costly and difficult to pay off. For some, the only way to reduce their credit card debt will always be to stop using credit cards. Nevertheless, there are several innovative credit cards that offer features to help cardholders pay down their credit card balances and other debts. And in their fight against debt, credit card users need all the help that they can get.