For many years I used a 1% cash back credit card for all my purchases.

While this wasn’t a bad move – 1% is better than nothing, which is what you get from a debit card – it’s not ideal.

There are credit cards that offer 2% cash back on every purchase, which is double what I was getting. There are also many cards that have lucrative sign-up offers that I was completely missing out on.

If you start utilizing credit card rewards to make your vacations free or cheap, or to collect free cash back rewards, you are likely going to have a number of cards open. Some of these cards inevitably will come with an annual fee, or with a sign-up bonus that you must achieve within a certain amount of time (e.g. spend $2,000 within the first 4 months of card opening to earn 50,000 points that can be redeemed for a $500 statement credit, for example).

Between cash back credit cards, airline credit cards, and “point” credit cards, my wife and I have multiple credit cards.

It can be difficult to keep everything straight when you have multiple cards open, so I asked myself recently: why don’t I just take a few minutes when I open a card to record information in a spreadsheet?.

I create spreadsheets all the time. I work in spreadsheets all day at work and spreadsheet consulting is one of my side hustles. Many times it’s a no-brainer to me that setting up a spreadsheet is a good idea.

So I created a credit card rewards tracking spreadsheet in Excel.

The Credit Card Rewards Tracking Spreadsheet in Excel

 
The spreadsheet I created is simple yet effective. It can help you avoid forgetting about a card and having it renew, and it will help you keep a history of the rewards that you’ve gained so far.

 
This spreadsheet has a variety of columns to capture everything you would want to know about the card you signed up for, including when you would want to cancel it by to avoid the annual fee. The columns include:

• Number
• Credit Card Name
• Company
• Business or Personal
• Date Opened
• Date Annual Fee Hits
• Closed?
• Annual Fee
• Annual Fee Waived First Year?
• Bonus: Spend Required
• Bonus: Spend Timeline
• Bonus Complete By Date
• Bonus Description
• Bonus Program
• Who Signed Up?
• Notes

When you download the file you’ll see an example credit card I added in the first row. This example can serve as a guide to populate your credit cards. You can also add or delete columns as you see fit.

I’ve been using this spreadsheet for over five years and it’s one that I keep going back to. I have yet to see a better system for managing all your credit cards and tracking rewards and annual fees.

If you want the free credit card rewards tracking spreadsheet fill in the form below and it will be sent to your email.

There are hundreds of credit card options out there, so how does someone go about choosing their first credit card?

“What credit card should I get?” is a question I hear often. Many who are picking out their very first credit card are overwhelmed by the options.

Not all credit cards are available to those who have never opened one. Many require good or excellent credit scores. But if you haven’t opened a credit card you haven’t had time to build a solid credit history that would qualify you for a wide range of cards.

There’s a few things I think people should keep in mind when opening their first card, such as opening one with no annual fee, using only a small percentage of your available credit, and more. We’ll get into all of that, but first let’s get to what I recommend for a first credit card.

The Best First Credit Card

 

The card I recommend for a first credit card is the Discover it® Cash Back card.

Discover was my first credit card. I opened my Discover card about a decade ago and have been using it ever since.

Special Offer: When you use our link to sign up (any link on this page), you will get a $100 statement credit when you record your first purchase within three months.

Here’s some reasons I think the Discover it® Cash Back card is the ideal first credit card:

1) No Annual Fee

 
When it comes to a first credit card, having no annual fee is the most important feature I look for. If a card has an annual fee, it’s simply not a good first credit card.

Your credit score is, in part, based on your credit history. If you open a card with no annual fee you can keep it open forever even if you decide to stop using it and move on to a different card. If you open a card with an annual fee you will likely end up closing it, perhaps even within a year or two of opening it.

The Discover it® Cash Back card does not have an annual fee, so it fits the bill.

2) Solid Rewards

 
While it’s true that there is no huge sign-up bonus for the Discover it card, it does have solid rewards you will be able to take advantage of.

• 1% Cash Back on Every Purchase
   
  The Discover it® Cash Back card has always offered 1% cash back, regardless of where the purchase was made, what was purchased, etc. No matter what you will always get 1% cash back on every purchase.

• 5% Revolving Quarterly Cash Back Categories
   
  Each quarter of the year Discover offers a new 5% cash back offer. For example, this quarter it may be 5% cash back on restaurants, up to a certain amount (i.e. $1,500). Next quarter it could be Amazon purchases. There is a new category every quarter.
   
  This is a great perk if you take advantage of it. 5% cash back is not something you will find on many other cards.

• Partner Gift Cards
   
  One of my favorite benefits of the Discover it® Cash Back card is the partner gift card program. My wife and I have used this for years and it’s always nice to get a “free” gift card.
   
  It’s a really simple program. If you use your cash back rewards to redeem a gift card, you will get the gift card at a discounted rate. For example my two personal favorite gift cards to get are $50 Starbucks and Chipotle gift cards. You can get either of these for just $45 of your cash back, which means you get another free $5 on top of the $45 you already accumulated through cash back rewards.
   
  There are currently 100+ participating stores/brands and some have even better deals than what I described for Chipotle and Starbucks. For example, a $50 Gap gift card can be had for just $40 in cash back rewards. A $50 AMC gift card can be had for $45 in cash back rewards, and so on.

3) Free FICO Credit Score

 
If you get a Discover it® Cash Back card you have complimentary access to your FICO credit score. This perk is no longer unique, as many if not most credit cards now offer a free credit score. With that being said, I like how the Discover FICO credit score shows your total number of accounts, length of credit history, number of credit inquiries the past 12 months, and what your credit utilization is.

 
Special Offer: When you use our link to sign up (any link on this page), you will get a $100 statement credit when you record your first purchase within three months.

Tips for People Getting their First Credit Card

 
It’s important to use your first credit card responsibly. It can be a great tool to build your credit history, but only if you use it right. It’s best to be disciplined from the get-go so you don’t fall into the trap and habit of maxing out your credit cards.

Here’s 3 tips for people getting their first credit card:

• Treat your credit card like cash
   
  The fact that you are getting your first credit card means that you are not in credit card debt. You have an opportunity to never get into credit card debt, but it requires you to immediately get in the mindset of treating your card like cash.
   
  If you don’t have the money, don’t charge it, and make sure you pay off your credit card in full each month.

• Only use 1/3 of your available credit at any one time
   
  Using only 1/3 of your available credit may not seem like common sense, but your credit score is impacted by how much credit you utilize. So if you were approved for $1,000 in credit you should keep the balance on your card below $333, or less, at any given time.
   
  There is no penalty for making multiple payments towards your credit card throughout the month, so consider taking that approach if you are worried you will go above the 1/3 credit utilization threshold.
   
  This can be difficult with your first credit card. There is a good chance you will only be approved for a small amount, such as $500. 1/3 of that is not much, so you’ll need to limit what you charge to your card as well as pay it off diligently.

  That brings us to our next tip of requesting an increase in your credit after 6-12 months.

• Request a credit increase after 6-12 months
   
  Along the same lines of only using 1/3 of your available credit, you will also want to consider requesting a credit increase after 6-12 months. If you have been consistently paying off your card you are likely in a good position to have your request approved.
   
  How do you request a credit increase? With Discover it’s an option within their online dashboard. If you aren’t approved, don’t sweat it. You can wait another few months and submit the request again.

 
To summarize, I recommend the Discover it® Cash Back card as a first credit card. It has no annual fee, solid rewards, and a free FICO credit score.

When you apply through our link, you get a $100 statement credit when you make your first purchase within 3 months.

 
To be clear, this isn’t the only option for a first credit card. There are other good cash back and rewards credit cards that you may want to consider for your first credit card. You can browse the other options here.
 
 

This isn’t surprising. We are inundated with Instagram pics of people visiting cool locations all over the world.

In Minnesota where we have brutal winters, a pic from a beach can instantly cause wanderlust (and jealousy).

The main thing keeping people from traveling is money.

I can relate: my wife and I graduated undergrad with $100k in student loan debt.

Even if you have little or no debt there is a never-ending list of things you need money for: rent, a down payment on a house, health care, retirement, pets, emergency fund…the list goes on.

Travel is something we wanted to prioritize after college. But we also wanted to hit other personal finance goals, including building an emergency fund which is no small feat.

One of the benefits of being a personal finance blogger is that I am exposed to many different ways to save money. The more I learned about credit card rewards, the more I realized that they could help make our travel goals possible.

Travel rewards credit cards oftentimes come with a “welcome” bonus, such as “get 50,000 miles if you spend $3,000 on your credit card within the first three months of signing up.” Those welcome bonuses can really pay off because they translate to hundreds of dollars of savings through a statement credit or through free flights.

 
A quick note: If you are currently in credit card debt I recommend not signing up for these cards. The amount you pay in interest will outweigh any potential benefits. Instead, read my post about what to do if you are in credit card debt.

OUR TOP CHOICE: Chase Sapphire Preferred

 
The Chase Sapphire Preferred has been one of the top credit cards on the market for some time now.

One positive of this card is the fact that there are so many partner programs that you can transfer your 60,000 Chase Ultimate Rewards® to. The points transfer 1:1 to the following programs:

• United MileagePlus®
• British Airways Executive Club
• Aer Lingus, AerClub
• Emirates Skywards®
• Flying Blue AIR FRANCE KLM
• Iberia Plus
• Singapore Airlines KrisFlyer
• Southwest Airlines Rapid Rewards®
• Virgin Atlantic Flying Club
• IHG® Rewards Club
• Marriott Bonvoy
• World of Hyatt®

Both my wife and I have signed up for this card and we transferred the points to our United MileagePlus® account. You don’t have to transfer your points to get value out of this card, though: the 60,000 Chase Ultimate Rewards® bonus points are redeemable for $750 on the Chase portal.

Bonus: 60,000 Chase Ultimate Rewards® bonus points

How to Unlock the Bonus: Spend $4,000 within the first 3 months of account opening

What the Bonus can be Used for: Redeemable for $750 through Chase Ultimate Rewards® or transfer 1:1 with partner travel rewards programs

Annual Fee: $95 (NOT waived the first year)

Capital One® Venture® Rewards Credit Card

 
The Capital One® Venture® Rewards Credit Card is one of the best travel rewards credit cards because of how flexible its rewards are.

This card offers $500 towards any travel-related cost after you spend $3,000 within the first 3 months of account opening.

This card is great because of its simplicity. You know exactly what you are getting with this card and you don’t have to limit yourself to specific companies or brands when redeeming your rewards.

An extra perk with this card is that you will receive up to $100 application fee credit for Global Entry or TSA Pre®.

Bonus: 50,000 bonus miles

How to Unlock the Bonus: Spend $3,000 within the first 3 months

What the Bonus can be Used for: Redeemable for $500 in travel-related expenses

Annual Fee: $95 (waived for the first year)

Chase Sapphire Reserve

 
The Chase Sapphire Reserve is a popular credit card, but it does come with a hefty price tag: a $550 annual fee.

Typically a card with a $550 annual fee wouldn’t be worth getting for anyone other than those who travel frequently. But one nice thing that comes with this card is a $300 annual travel expense credit. Assuming you will for sure have at least $300 in travel-related costs each year, the effective cost of the card is $150. Some of the other benefits of the card, such as lounge access and built-in trip insurance, can make the card annual fee worth the cost.

Similar to the Chase Sapphire Preferred, the Chase Ultimate Rewards® points transfer 1:1 to the following programs:

• United MileagePlus®
• British Airways Executive Club
• Aer Lingus, AerClub
• Emirates Skywards®
• Flying Blue AIR FRANCE KLM
• Iberia Plus
• Singapore Airlines KrisFlyer
• Southwest Airlines Rapid Rewards®
• Virgin Atlantic Flying Club
• IHG® Rewards Club
• Marriott Bonvoy
• World of Hyatt®

There are a couple additional perks worth pointing out. Chase will reimburse your expense for a TSA pre-check or global entry account up to $100, and they also provide you with one-year complimentary access to a network of over 900 airport lounges.

I signed up for global entry, which includes TSA Pre-Check, and it was so worth it. The first time I used it was a trip to NYC. I checked in online from home so I didn’t have to wait to print a boarding pass. Even with checking a bag it was under 10 minutes from stepping out of the car to being past security. I highly recommend it even for casual travelers.

Bonus: 50,000 Chase Ultimate Rewards® bonus points; $300 annual travel credit; Credit for Global Entry or TSA Pre-Check application

How to Unlock the Bonus: Spend $4,000 within the first 3 months of account opening

What the Bonus can be Used for: Redeemable for $750 through Chase Ultimate Rewards® or transfer 1:1 with partner travel rewards programs

Annual Fee: $550 (NOT waived the first year)

United Explorer Card

 
The United Explorer Card is a great card to have if you plan on flying United or if you either already signed up or plan on signing up for the Chase Sapphire Reserve® or the Chase Sapphire Preferred.

This has been my airline of choice the past few years because of how many miles you can rack up when you transfer Chase Rewards points 1:1. My wife and I have amassed over 300,000 miles and have used it to travel to Florida, St. Martin, and New York City. United is an ideal airline to have miles for because of the sheer number of locations they fly to.

Like most airline cards you will get free checked bags, but unlike other airline cards you will also get a pair of passes each year to the United lounge. I’ve taken full advantage of this perk over the past few years and it can make a layover at the airport a bit more tolerable.

Bonus: 40,000 United MileagePlus® Miles

How to Unlock the Bonus: Spend $2,000 within the first 3 months

What the Bonus can be Used for: Flights on United Airlines

Annual Fee: $95 (waived the first year)

Delta SkyMiles® Gold American Express Card

 
The Delta SkyMiles® Gold American Express Card has standard rewards you should expect from an airline credit card: first bag checked free (for everyone in your reservation) and priority boarding.

While there are other benefits such as no foreign transaction fees, the real draw of this credit card is the welcome offer.

Earn up to 70,000 bonus miles. Earn 60,000 bonus miles after you spend $2,000 in purchases on your new Card in your first 3 months. Plus, earn an additional 10,000 bonus miles after your first anniversary of Card Membership.

When you apply for the Delta SkyMiles® Gold American Express Card and spend $2,000 within the first 3 months of account opening, you earn 60,000 Bonus Miles. You can also earn an additional 10,000 bonus miles after your first anniversary of Card Membership.

Welcome Offer: 60,000 Bonus Miles

How to Unlock the Welcome Offer: Spend $2,000 within the first 3 months; also earn an additional 10,000 bonus miles after your first anniversary of Card Membership.

What the Welcome Offer can be Used for: Delta SkyMiles

Annual Fee: $99 (waived for the first year)

Southwest Airlines Rapid Rewards Plus

 
The Southwest Airlines Rapid Rewards Plus card is an airline card, and airline cards typically come with free checked bags. This card is no different, with first and second checked bags flying free.

But the main draw of this card is the 40,000 Southwest Airlines Rapid Rewards points, along with the potential of gaining their coveted Companion Pass. The Companion Pass allows you to book a designated companion’s flight for free, regardless of whether you pay with points or cash.

To get the Companion Pass you have to earn 110,000 Rapid Rewards points in a calendar year. This card will get you 40,000 (or 41,000 if you include the 1,000 you will get when you spend your $1,000 to get the bonus). If you get the Chase Sapphire Preferred and transfer over those 50,000 points you are even closer. Note: as of January 2020 you will need to earn 125,000 qualifying points to earn the companion pass.

Bonus: 40,000 Southwest Airlines Rapid Rewards® points

How to Unlock the Bonus: Spend $1,000 within the first 3 months of account opening

What the Bonus can be Used for: Southwest Airlines Rapid Rewards

Annual Fee: $69 (NOT waived the first year)

_________________________________________

There are a ton of travel reward credit cards with great bonuses. Using these cards alone could potentially save you thousands of dollars on travel.

Other Posts that Will Help You Save Money on Travel:

• Chase Ultimate Rewards: Our Simple Guide to Maximizing Your Points

• Tips for Making Travel More Affordable: Save Thousands on Travel

• What to Expect When Using AirBnB for the First Time

When I think of a good credit card for everyday purchases, it naturally leads me to cash back credit cards. They offer consistent rewards and typically have no annual fee.

While some people try to get travel rewards from their credit cards, if you want to keep things simple a cash back credit card is a great option. And let’s be honest: travel rewards during COVID aren’t that great.

This post shares some of the best cash back credit cards on the market today. We update this post regularly with new offers.

I look for two things when I think of top cards for everyday purchases:

• No Annual Fee

• Consistent Rewards

Here are our current picks for cash back credit cards:

1) Chase Freedom Flex

 
The Chase Freedom Flex Credit Card, is a brand new credit card from Chase. It’s loaded with an outstanding sign-up bonus where you get $200 cash back after you spend $500 on purchases in your first 3 months from account opening. I repeat: spend $500, get $200(!) This is a really great offer.

But it doesn’t stop there. Here are some other perks that come with the card:

• 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter

• 5% cash back on grocery store purchases (not including Target® or Walmart® purchases) on up to $12,000 spent in the first year

• 3% cash back on dining and at drug stores

• 1% cash back on all other purchases

Bonus: One-time $200 Bonus after you spend $500 on purchases within the first 3 months from account opening.

Annual Fee: None

Learn how to apply for the Chase Freedom Flex credit card

2) Fidelity® Rewards Visa Signature® Card

 
The Fidelity® Rewards Visa Signature® Card is an excellent cash back credit card, with 2% cash back on every single purchase, no exceptions.

This card has the added benefit of being deposited directly into your Fidelity account. Naturally this makes it more likely that you will use your cash back to invest.

Bonus: Receive 10,000 Bonus Points—which equals $100 cash back, when deposited into an eligible Fidelity account—after you make at least $1,000 in eligible purchases within the first 90 days of account opening.

Annual Fee: None

Both personal loans and 0% APR credit cards can be used to aid in debt repayment. But how do they work? And how do you know if one method is right for you? Here’s everything you need to know about personal loans versus 0% APR credit cards.

What is a Personal Loan?

 
A personal loan is just that – a loan you can take out for various personal reasons. While personal loans can be used for a variety of reasons, they are often used to pay off high-interest debt.

It works by this: once you are approved for a personal loan, you can use that amount you received to pay off your original debt. Then, instead of making monthly payments to your original lender, you now make payments to your personal loan provider. You pay a regular, fixed amount each month until your personal loan is paid off.

Personal loans are installment loans, which means you receive the loan amount all at once and repay it according to a fixed repayment plan.

Pros of Personal Loans

 
At first, the idea of a personal loan may seem redundant. Why pay off debt with another form of debt? Well, there are a few reasons.

First, the interest rate of a personal loan is often lower than other debt interest rates. Say, for instance, you have $5,000 in credit card debt. You are paying the average credit card interest rate, which is around 18.61%. Each month, a large portion of your payment goes towards interest. It may not even feel like you are making much progress in paying off your credit card debt.

Now, say you took out a personal loan for $5,000 at the average rate of 9.41%, according to Experian. While you are still paying a relatively high interest rate, it is much lower than the 18.61% interest rate of your original credit card debt.

Another advantage of personal loans is the ability to consolidate. If you have multiple debts, such as two credit cards you’re paying off, you can consolidate them by using a personal loan. Since you repay personal loans at a fixed rate every month, you may find it easier to do that than to pay multiple lenders.

Cons of Personal Loans

 
One drawback of personal loans is the interest rate. While the average interest rate on a personal loan may beat the typical credit card interest rate, it all depends on your credit score. If you have fair or ad credit, you will likely find you receive quotes for much higher rates.

Secondly, while the fixed monthly payments can be nice in some circumstances, they are also difficult to adjust. So if you find yourself in a period of financial hardship, you may not be able to have much flexibility with your lender.

What is a 0% APR Credit Card?

 
A 0% APR credit card is one with a 0% interest rate for a set period of time. Many credit card companies offer 0% interest for a period of time (usually around one year) as a promotion to get new customers in the door.

Like any other credit card, a 0% APR card is considered a revolving form of credit. Unlike a personal loan where you are given a one-time lump sum, with a credit card, you can spend up to your limit, pay it off, and continue spending.

To aid in debt repayment, you can transfer your debt balance to a 0% APR credit card. Now, instead of paying off the original lender, you are paying off your credit card. Keep in mind, if you don’t pay off the credit card by the time the introductory period is up, the interest rate can skyrocket back up.

Pros of 0% APR Credit Cards

 
If used correctly, you can pay off debt without paying any interest, hastening your debt repayment progress.

Let’s go back to an example where you have $5,000 in credit card debt. You were approved for a credit card with a 0% APR for one year. You transfer the $5,000 balance to your new credit card. Ideally, you then pay off the $5,000 of debt within the one year period so you aren’t paying anything in interest.

Cons of 0% APR Credit Cards

 
Using a 0% APR credit card to pay off debt requires dedication and commitment on your part.

There is no lender holding you to a set repayment schedule, so it can be easy to not pay your credit card, and then end up right back where you were. Or worse, you could rack up even more credit card debt after the introductory period is over.

Other cons include the annual fees sometimes associated with credit cards And if you have a fair to poor credit score, it may be difficult to get approved for a 0% APR credit card.

Many credit cards charge a balance transfer fee, which typically ranges between 3% to 5% of the transfer balance. Do your research in advance to see if you will be charged a balance transfer fee.

Which Option Is Right for You?

 
Both personal loans and 0% APR credit cards can be good options, but it really depends on your circumstances. If you have a high debt balance and don’t think you could pay it off in the promotional period, then you may want to consider a personal loan instead. But if you’re confident you can pay off your debt in the intro period, then doing a balance transfer to a 0% APR credit card can save you a ton of money in interest. Either way, both can be used as tools to help you pay off debt even faster.

Click the options below to get free personal loan rate quotes on Credible (remember – getting a rate quote does not impact your credit) or browse 0% APR balance transfer credit cards.

Double-digit interest rates on credit cards is standard, and 20%+ is not uncommon.

Credit cards with a 0% APR period allow you to pay no interest for a limited time on purchases, balance transfers, or both.

A card with 0% APR can give some breathing room for those working to pay off debt. It can also be beneficial for a large expense that will take a few months to pay off, since the 0% APR period typically applies to new purchases as well.

Here is our recommendation for a 0% APR transfer credit card:

Chase Freedom Unlimited®

 
Chase Freedom Unlimited® is our favorite balance transfer credit card. It offers a 0% introductory APR for 15 months from account opening on both balance transfers and purchases.

There is a 5% intro balance transfer fee when you transfer a balance during the first 60 days your account is open. The minimum balance transfer fee is $5.

You can earn a $200 Bonus after you spend $500 on purchases in your first 3 months from account opening. Ongoing rewards include 5% cash back on grocery store purchases (not including Target® or Walmart® purchases) on up to $12,000 in the first year. You also get 1.5% cash back on every purchase, and no minimum required to redeem cash back.

Balance transfer Intro APR: 0%

Balance transfer Intro APR period: 15 months on both purchases and balance transfers

Balance transfer fee 5% of each balance transfer with a minimum of $5

Annual fee: $0

What is a 0% APR Credit Card Offer?

 
A credit card with a 0% APR period gives you a period of time where you are not charged interest on your credit card balance. 15 months is a common 0% APR period that credit card issuers offer.

This 0% APR period typically is for both balance transfers and purchases. If you find yourself in one of these two situations you could potentially save a lot of money by opening a 0% APR credit card:

• You have been carrying a balance on your credit card – It’s common for credit card interest rates to be double digits, sometimes as much as 20%+. The longer you carry a balance, the more you will end up paying in interest. And then you’ll pay interest on interest. Moving your credit card balance to a 0% APR credit card can give you some breathing room and allow you to make progress on paying down the balance.

• You need to make a large purchase – According to a January 2020 Bankrate survey, nearly 4 in 10 Americans would borrow money if they had a $1,000 bill for something such as the emergency room or a car repair. If these expenses were put on a common credit card the bill could end up costing hundreds of dollars in interest. A 0% APR credit card, on the other hand, offers you months to pay back the unexpected expense, all with no interest.

If you are opening a 0% APR credit card to make progress on your debt, it’s important that you stick with your plan. It’s very easy to move the balance over and then forget about it. After all, 15 months is a relatively long period of time. If you don’t make progress on your debt, though, you may end up in a worse situation than when you started.

How Do You Choose a 0% APR Credit Card?

 
When you choose a 0% APR credit card, you should focus on a few aspects of the card:

• Length of 0% APR Period – You should look for cards with at minimum 15 months of 0% APR.

• No Annual Fee – The card you chose should have no annual fee. This is the case with many 0% APR balance transfer credit cards, but there are some that come with a fee.

• Other Benefits – A signup cash back bonus is always nice, and the cards we highlighted all have a cash back signup bonus. The card should also have attractive cash back benefits. The cards we shared have either 1% or 1.5% cash back on every purchase, and some had additional higher cash back percentages for certain categories .

A quick warning on deferred interest offers. I will use a furniture store as an example. Many furniture stores offer 0% interest financing for a given period of time, say 12 months. The store may word the offer like this “no interest if paid back in full within 12 months.” This is an example of deferred interest.

With deferred interest, if you don’t pay off the purchase in full within 12 months, you will be charged interest dating all the way back to when you first made the purchase. Then you’ll owe the original amount plus the deferred interest. Make sure the credit card you get actually has 0% interest and you aren’t signing up for a deferred interest offer.

Credit card debt typically comes with a high interest rate, and it can be difficult to make a dent in the balance.

In an effort to pay off credit card debt sooner than later, many people opt to take out a personal loan to pay off their card debt.

But is this a good option for you? Here’s what you need to know about paying off credit card debt with a personal loan – as well as a second option that you may or may not have considered.

What is a Personal Loan?

 
A personal loan is money lent by a bank or online lender. With a personal loan, you typically are approved to borrow up to a certain amount, and then pay it back to the bank in fixed monthly payments. Just like credit card debt, you pay back the entire loan amount plus interest.

Personal loan interest rates vary, but range from less than 5% to 20%+ APR. Approval for the loan amount and interest rate depends on a variety of factors, including credit score, debt-to-income ratio, the lender, and how much is being borrowed.

The primary difference between a personal loan and credit card debt is two-fold:

• Payback Terms – One reason credit card debt can be so devastating is because you don’t have to pay it back in a defined term. There is a minimum payment you must make, but that can be relatively small compared to the balance. If you only pay the minimum for a long period of time you will end up paying back much more than you originally charged on the card.
   
  With a personal loan you have consistent required payments and, most importantly, an end date. If the personal loan doesn’t have an early payment penalty you can speed that date up further by making extra payments.

• Interest Rate – Besides having a defined end date, the primary reason people use a personal loan to pay back credit card debt is because the interest rate is almost always significantly lower. For example, if you received a rate of 10% for a personal loan you would have significant interest savings compared to keeping the credit card debt, which will typically be in the 20%+ range.

Is a Personal Loan Better than Credit Card Debt?

 
It may seem contradictory to take out debt to pay off debt, but there is one major advantage of taking out a personal loan to pay off credit card debt – interest rate.

Credit cards usually have much higher interest rates than a personal loan. The average credit card interest rate is approximately 16%, but many cards are closer to 20%. So, if you are able to secure a personal loan for, say, a 5%-10% interest rate, you can drastically lower the amount you pay in interest.

Curious what rate you could get? Credible compares rates from over 10 different lenders. Get a free rate quote on their site (checking rates does not affect your credit).

Should You Take Out a Personal Loan to Pay Off Credit Card Debt?

 
If you are able to make your payments on time and secure a low interest rate, then you may want to consider paying off your credit card debt with a personal loan.

One important difference to note is credit card debt is called revolving debt, meaning you are only required to make the minimum payment. In contrast, with a personal loan, you must pay the entirety of the installment every month. However, if you’re able to pay the full monthly installment, then using a personal loan to pay off higher interest credit card debt would be an excellent option.

How to Use a Personal Loan to Pay Off Credit Card Debt

 
The first step to paying off your credit card debt is to secure a personal loan. Since interest rates can vary drastically, it’s a good idea to get a few quotes to ensure you find the best possible deal.

To make it easy on yourself, use an online marketplace like Credible, which provides borrowers with competitive and personalized loan offers from multiple lenders. The nice thing about using a service like Credible is you only have to fill out one form instead of submitting separate applications for each lender. You can then easily compare lenders to see who is offering the best rates and terms.

Once you open a personal loan, you then must make the monthly payments to your new lender. Most of the time, lenders allow you to set up an automatic payment, so you just need to be sure you have enough money to cover the entirety of the payment each month.

Another Option: 0% APR Balance Transfer Credit Card

 
One solid alternative is a balance transfer credit card. With a balance transfer card, you transfer your existing credit card balance onto a new credit card with 0% APR for a defined period of time.

To see how this works, say you have a $5,000 balance on a credit card with a 15% interest rate. A large portion of every payment you make is going towards interest. To lower the amount you pay in interest, you decide to shop around for a credit card that offers an introductory 0% interest rate for the first year.

You open a new credit card and then pay off your original credit card with your new card. You now have a $5,000 balance on your 0% APR card. You then have one year (or whatever the term is, typically 12+ months) to pay off your $5,000 balance before your interest rate increases from the 0% introductory offer.

At least in theory a 0% balance transfer credit card makes more sense than a personal loan. With a personal loan you will still have a portion of your payment going towards interest. With a balance transfer credit card you will have months and months of 0% interest.

But this assumes two things: that your application for the balance transfer credit card is accepted, and that you actually pay off a large portion (or ideally all) of your debt before the 0% introductory period ends.

Needless to say, the risk with a balance transfer is you have to be committed to paying off your debt in order for it to work. Otherwise, your debt will continue to balloon if you surpass the initial introductory period offered by the new credit card. However, if you’re diligent in creating your own payment plan and sticking to it, you may want to consider doing a balance transfer.

Which is the Best Option for You?

 
Ultimately, deciding the best way to pay off your credit card debt is entirely up to you. But before you make a decision, it’s vital to consider your financial habits. When done correctly, using a personal loan to pay off credit card debt can save you hundreds, if not thousands of dollars in the long run. The same can be said of 0% APR balance transfer credit cards.

One option is consider a tiered approach. You could first give a 0% balance transfer credit card a try. If you are unable to pay off all the debt during the introductory period, you could take what remains and pay it off with a personal loan.

Similar to refinancing student loan debt, we recommend people get rate quotes at least every 6-12 months to see if a better offer is available. Let’s say you took out a personal loan a year ago and got an 11% APR. If you look again and find offers for, say 8% APR, it totally make sense to refinance (assuming no early payment penalty for the 11% APR loan – which is likely the case but always read the fine print).

Click the options below to get free personal loan rate quotes on Credible (remember – getting a rate quote does not impact your credit) or browse 0% APR balance transfer credit cards.