How a Credit Card Can Actually Help You Get Out of Debt

# How a Credit Card Can Actually Help You Get Out of Debt

Using a credit card to escape debt sounds backward. Yet the right card strategy works for people drowning in high-interest balances.

The math is simple. If you carry $5,000 on a card charging 20% annual interest, you pay $1,000 yearly just in interest. A balance transfer card offering 0% APR for 12 months eliminates that interest charge entirely during the promotional period. You redirect that $1,000 toward principal instead.

Cards like the Citi Simplicity Card, Chase Slate Edge, or American Express EveryDay Preferred offer balance transfer promotions. These typically run 6 to 21 months interest-free, depending on the card. The catch: most charge a balance transfer fee of 3% to 5% of the amount moved. On a $5,000 transfer, expect to pay $150 to $250 upfront. That still beats paying $1,000 in annual interest.

Here's the key discipline required. You must stop using credit while paying down the transferred balance. Open a new card specifically to consolidate debt, not to fund new spending. If you rack up fresh charges while paying off the transfer balance, you'll end up worse than before.

The strategy works best if you have a concrete payoff plan. Calculate how much you need to pay monthly to eliminate the balance before the promotional rate expires. A $5,000 transfer with a 12-month 0% window requires roughly $420 monthly to clear it completely.

Your credit score takes a small hit when you open a new card and transfer a balance. Hard inquiries and new account activity lower your score temporarily. However, consolidating high-interest debt into a 0% promotion typically improves your score within a few months as your debt-