Debt-Free with 0% Credit Cards:

Normally, when you're looking to consolidate credit card debt you have the following options: get a debt consolidation loan -or- apply for a home equity loan. But if your credit card debt is still manageable, you may want to consider consolidating your balances to a 0% APR credit card instead. Using a 0% APR credit card will help you spend more money paying off your balances, and less on interest charges!

To use a 0% APR credit card to become debt-free, follow these basic steps:

1. Transfer your existing credit card balances to a new 0% APR credit card.
2. Continue to pay down your balance as usual. But instead of paying only the minimum each month, also pay the amount of interest you would have paid with your other card. This will reduce your debt even quicker!
3. Watch your introductory period. When it's about to expire, shop around for a new 0% APR credit card and transfer your balances again.
4. Continue this cycle until you're debt free!

0% APR Credit Cards vs. Debt Consolidation:

So you're considering a debt consolidation loan instead of a 0% APR credit card. Let's examine the details to see how much you can save, and how much quicker you can pay off your debt using the method shown above. Here's an example:

Assume you have an existing credit card debt of $15,000. You would like to pay $250 per month until the debt is paid off. Your debt consolidation loan was approved at 7% (much lower than your original 12% credit card!).

Beginning Balance	$15,000
Total Principal Year 1	$2,014
Total Principal Year 2	$2,160
Total Principal Year 3	$2,316
Total Principal Year 4	$2,483
Total Principal Year 5	$2,662
Total Principal Year 6	$2,855
Total Interest Paid	$3516
Total Amount Paid:	$18516
Total Payments Made:	75

Now let’s compare paying off this same debt using 0% APR credit cards.

Beginning Balance	$15,000
Total Principal Year 1	$3,600
Total Principal Year 2	$3,600
Total Principal Year 3	$3,600
Total Principal Year 4	$3,600
Total Principal Year 5	$600
Total Principal Year 6	$0
Total Interest Paid	$0
Total Amount Paid:	$15,000
Total Payments Made:	60

You save $3516 over a six year period! Plus you'll be done with your payments 15 months sooner! Imagine being debt free over a year before you planned!

Words of Advice:

Although using 0% credit cards to pay down your debt is a great option, try not to switch credit cards too frequently. Doing so can negatively impact your credit report. Shop around for 0% APR credit cards that have the longest introductory periods and the lowest APRs (after the intro period) to buy you a little breathing room. Also, don't fall into the trap of spending again on your old credit cards. Either close them or deactivate them so that you don't get yourself into further debt. And don't overspend with your new card either (even if it is 0%)! Finally, make sure you apply the money you saved on interest to your new payments to help eliminate your debt faster.
 

Other Related Articles:

Low interest vs. 0% APR credit cards: Not sure if you should apply for a low interest or a 0% intro APR credit card? We'll show you the pros and cons of each!   Choosing the best low APR / 0% credit card: Find out what factors you should consider when choosing a low interest or 0% APR credit card offer.   Save money with low interest / 0% credit cards: Start saving money with a low interest or 0% intro APR credit card. We'll show you how to benefit from both!   Variable vs. fixed rate credit cards: After your intro period is over, which is better; a low variable rate or a low fixed rate? We'll show you the pros and cons of both!