Welcome to Ask Clark, a column designed to answer your financial questions, by money expert Clark Howard.
To Pay Off My Credit Card Balance, What Reward Cards Would You Recommend?
Georgia in Connecticut: “I have a hefty balance on a credit card. I just want to know if there’s a credit card that I could apply for that would give me rewards to pay off that balance.”
Clark’s Take on Getting Credit Card Rewards When You Have a Big Balance
Clark says: “Don’t worry at all about the rewards.” He says what you should worry about is the interest rate you’re paying on that balance.
“No rewards, effectively are going to be valued by any significant amount compared to the interest rates that you’re playing with when you’re paying a balance on a card,” Clark says.
Here are four options that Clark recommends you take if you’re trying to pay off credit card debt.
1. Apply for a Balance Transfer Card
You may find that it will benefit you to get a balance transfer card, “one where you might pay a fee upfront but in return you will have a very low or zero interest rate for a period of 12 to 18 months,” Clark says.
2. Get a Credit Union Card
Credit union cards typically carry an interest rate that is several times lower than bank-issued credit cards, Clark says.
3. Negotiate a Lower Interest Rate
You also have the option of negotiating a potentially lower interest rate with your current issuer. Clark says: “Tell them you’re going to transfer the balance of this other card that offered you a better rate. Ask them if they can lower your rate or otherwise you’re leaving. And they may in turn lower your interest rate.”
4. Try a Personal Loan Lender
Ather alternative is to look at converting your credit card debt into what used to be known as a “peer-to-peer loan.” There are several online platforms that facilitate making personal loans. Some top lenders that offer debt consolidation are:
“With somebody like Prosper, Lending Club or even SoFi, you move that balance over into a fixed rate that must be paid off over a set term of 24 or 60 months,” Clark says.
Want to reduce your debt with a credit card balance transfer? Here’s a step-by-step guide.
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