Money

The best credit cards to help you get out of debt

Photo by Britt Erlanson via Getty Images

Using a balance-transfer card, you can move debt from a credit card with a high interest rate to one that temporarily charges no interest, providing you with a window of time to focus on paying off your balance.

Since the average U.S. household with revolving credit card debt pays almost $900 in interest each year, using these cards responsibly can get you out of debt faster and at a lower cost.

But with so many different cards to choose from, it's hard to know which one is right for you.

To determine which card offers the best deal overall, CNBC Make It analyzed 25 of the most popular credit cards designed to help users pay off debt in the U.S. We estimated how long it would take to pay off a range of debts at different rates, and how much interest you'd pay with each card. We also considered reward offers and other perks, as well as downsides, such as late fees and penalty interest rates.

Based on the data, here is our No. 1 choice, our runner up and some other good options that may be better suited to your lifestyle.

Our pick for the best card to help you get out of debt

The U.S. Bank Visa Platinum is our No. 1 choice for two simple reasons. It has one of the longest introductory offers — no interest on balance transfers and purchases for 20 months — and a relatively low APR range thereafter: 11.74 to 23.74 percent, depending mostly on your credit score. The card requires no annual fee and throws in up to $600 in cell phone damage protection. The main downside: When you transfer a balance to the card, it requires a 3 percent fee. Keep reading for our full analysis of the U.S. Bank Visa Platinum card below.

The American Express EveryDay is the best card available without a balance transfer fee, meaning it doesn't cost you a thing to move debt from another card onto this one. Its no-interest introductory period on purchases and balance transfers is 15 months. Afterward the variable APR becomes 14.74 to 25.74 percent. The card rewards grocery spending with 2 points for every dollar spent at supermarkets and offers a bonus of 10,000 points. Keep reading for our full analysis of the American Express EveryDay card below.

How balance-transfer cards work

Transferring a large balance from a card with a high interest rate to one with a low interest rate, even if that favorable rate is only temporary, gives you an opportunity to pay off debt faster and ultimately at a lower cost.

The average American borrower has a credit card balance of $5,644. If you maintain that balance and pay interest on it at a rate of 15 percent, roughly the national average, you'd pay about $850 in interest every year. If you were to start paying off the card at $200 per month, it would take 36 months and cost $1,360 in interest payments.

Now, let's say you transfer the balance to the U.S. Bank Visa Platinum card, which has an introductory offer of 0 percent APR for 20 months on any balance you transfer to the card. Assuming you transfer the entire balance of $5,644 to this card and pay it off at the same rate, it will take 30 months and cost you only $265 on top of the principal. That's accounting for the balance transfer fee, too, which tacks on an additional 3 percent of your balance, or $170 in this case, to your debt. It's also assuming your variable APR after the introduction period is 11.74 percent, the lowest the U.S. Bank Visa Platinum offers.

What if you use the American Express EveryDay, which requires no balance transfer fee and has 15 months of no-interest? Assuming you qualify for a 14.74 percent APR, it would take you 30 months to pay off the balance and cost you only $260 on top of the principal.

Paying off the average credit card debt

Credit card
Total interest you'll pay
Months to pay it off
Current card with no introduction offer $1,358 36 months
US Bank Visa Platinum $265 30 months
American Express EveryDay $260 30 months
Source: CNBC Make It

Keep in mind when you use a balance-transfer card to make new purchases, it can get complicated if the no-interest introductory offer only applies to balance transfers and not new debt. In these cases, you will have different interests rates on the balance you transferred over and the balance you accrue with new purchases.

When you make a minimum payment — which is usually 1 to 3 percent or around $25 — your credit card issuer will put it toward your balance with the lowest interest rate. If you're still in the introductory period, it will go toward the balance you transferred onto the card with a 0 percent APR. Any payment above the minimum will go toward your balance with the highest interest, thanks to the Credit CARD Act of 2009.

To offer an example, let's say your new card has no introductory APR offer for purchases and requires a minimum payment of $25. If you put $500 on it one month and then go to pay that off, your first $25 would go toward the balance you transferred over from another card, not the balance you just accumulated making new purchases.

In order to pay off what you borrowed that month in full and avoid a potentially high purchase APR, you'd have to pay off the amount you spent on the card plus the minimum payment — in this case, $525. Any additional payment would then go toward the balance with 0 percent APR that you transferred over.

Who should get a balance-transfer card

If you're someone paying hundreds to thousands per year in interest on revolving credit card debt, you should consider consolidating your debt onto a low-interest credit card. The move can help you become debt-free, as long as you use the card appropriately.

About a third of balance-transfer cardholders fail to pay off their balance before the 0 percent promotional period ends, according to a report from Consumer Intelligence. At the very least, you should pay off as much as you can, since the variable APRs that issuers hit you with afterward can be high.

Many cards don't offer a low interest rate on new purchases, so collecting new debt can get expensive, as will failing to make payments on time. Late fees are usually more than $30, and if you're more than 60 days late, some cards hit you with a penalty APR, which means raising your interest rate to as much as 30 percent — indefinitely. Some cards will also cancel your 0 percent APR offer if you don't at least make the minimum payment.

Before applying for a card, read the fine print, especially since offers are temporary and credit card issuers change APRs and introductory period lengths. And when deciding, note that you can't usually transfer a balance from one card to another offered by the same issuer. So if you carry a balance on one Citi ThankYou Preferred card, for instance, you can't transfer it to the Citi Diamond Preferred Card.

If you're looking to borrow more than $15,000, whether it be for a long-term investment or to pay off debt, experts recommend considering a personal loan instead of a balance-transfer credit card, since they tend to have lower interest rates.

How your credit score affects your offer

Balance-transfer cards are especially useful if you have an excellent credit score. The higher your credit score, the lower your variable APR. The best cards, including the ones featured on this list, usually require users to have a credit score over 670.

Whatever your APR, if it's variable, it changes based on the Prime Rate, which is pegged to the federal funds rate. Earlier this summer, when the Federal Reserve increased that rate from 1.75 percent to 2 percent, cardholders saw a concomitant 0.25 percent hike in their APRs.

A higher credit score also helps you qualify for a higher credit limit, and you usually can't transfer a balance in excess of your credit limit. Some cards, such as the HSBC Gold MasterCard, allot users as much as $25,000 in credit, while other issuers don't reveal their cards' limits. The average credit limit is about $8,000. Issuers determine limits by credit worthiness, which is based on your credit score and your debt-to-income ratio, as well as a few other factors. Having little debt and a large income increases your creditworthiness.

Of course, if you are in debt, you might not have the best credit score, since debt can increase your credit utilization ratio, which you can calculate by dividing your balance by your credit limit. The lower your utilization ratio, the better for your score. If you have just fair or even poor credit and are unable to qualify for one of these cards, but would still like to stop paying off debt at such a high interest rate, consider getting a secured loan with a lower APR.

Why we chose the U.S. Bank Visa Platinum as our No. 1

The U.S. Bank Visa Platinum has the longest introduction APR on both purchases and transfers of any card from a major issuer: 20 months. Only one card currently offers a longer APR on transfers, the Citi Diamond Preferred card, but the Platinum offers a lower variable APR range, 11.74 percent to 23.74 percent.

Unfortunately, it doesn't reward your spending with cash back or points, but it does offer up to $600 in cell phone coverage against damage or theft.

It also requires a 3 percent balance transfer fee, but that's not as bad as the 5 percent fee that some competing cards require. And even with the balance transfer fee, because of the card's long introductory period and relatively low interest rate thereafter, the Platinum is the best card at helping people pay off debt quickly and at the lowest cost, according to our analysis.

US Bank Visa Platinum

Payment goal
Total interest you'll pay
$2,500 in 1 years $75
$5,000 in 2 years $170 - $190
$7,500 in 3 years $500 - $775
$10,000 in 4 years $1,230 - $1,940
Source: CNBC Make It
  • Introduction period: 0 percent on purchases and balance transfers for 20 months. Transfers must be made within 60 days of account opening
  • Variable APR: 11.74 to 23.74 percent based on your creditworthiness
  • Balance transfer fee: 3 percent, or $5 minimum
  • Rewards: None
  • Bonus: None
  • Annual fee: $0
  • Notable perks: $600 protection on your cell phone

Why we chose the American Express EveryDay as our runner-up

The American Express EveryDay is unique because it has no balance transfer fee. That means, if you can pay off your balance within the no-interest introductory period of 15 months, you'd only have to pay the cost of your balance, without any extra interest or fees.

The variable APR after that introductory period is 14.74 to 25.74 percent. As for rewards, the card offers 2 points for every dollar spent on groceries on up to $6,000 in purchases. Those who have a high enough credit limit to spend the $1,000 in the first 3 months with the card get a 10,000 point bonus, equal to $100.

For those paying off relatively modest levels of debt, this card may be the best choice. On the other hand, if you expect to be in debt for a while after that introductory period ends, you're probably better-off going with a card with a longer no-interest period. It may seem counterintuitive, since the larger your debt, the larger the balance transfer fee. But a large fee is usually worth paying if you need more time to get rid of your balance.

American Express EveryDay

Payment goal
Total interest you'll pay
$2,500 in 1 year $0
$5,000 in 2 years $110 - $190
$7,500 in 3 years $575 - $985
$10,000 in 4 years $1,415 - $2,470
Source: CNBC Make It
  • Introduction period: 0 percent on purchases and balance transfers for 15 months
  • Variable APR: 14.74 to 25.74 percent based on your creditworthiness
  • Balance transfer fee: 0 percent for first 60 days
  • Rewards: 2X points at supermarkets on up to $6,000 in purchases
  • Annual fee: $0
  • Bonus: 10,000 points if you spend $1,000 in first 3 months
  • Notable perks: Use your card 20 times in a month and get a 20 percent point bonus

The best of the rest...

While those two are our top choices overall, you may be looking for something more specific to suit your lifestyle or level of debt. Here are our other top picks:

If you want the longest grace period

For the longest no-interest introductory period on balance transfers, consider the Citi Diamond Preferred. There's a 0 percent APR on balance transfers for 21 months, as long as the transfers are completed within the first four months, and on purchases there's no interest for a year.

After the introduction periods, the variable APR becomes 14.74 to 24.74 percent based on your credit score. Unfortunately, the card does require a 5 percent balance transfer fee, and doesn't offer any rewards.

Citi Diamond Preferred

Payment goal
Total interest you'll pay
$2,500 in 1 year $125
$5,000 in 2 years $265 - $275
$7,500 in 3 years $680 - $880
$10,000 in 4 years $1,480 - $2,125
Source: CNBC Make It
  • Introduction period: 0 percent balance transfers for 21 months and 0 percent on purchases 12 months. Transfers must be completed in first four months
  • Variable APR: 14.74 to 24.74 percent based on your creditworthiness
  • Balance transfer fee: 5 percent, or $5 minimum
  • Rewards: None
  • Bonus: None
  • Annual fee: $0
  • Notable perks: None

If you want rewards

The Discover It is a great card for getting out of debt and racking up rewards. The variable rate can be relatively low, 13.74 to 24.74 percent, and it offers a long introductory period. When you apply for the card, you decide whether you want 18 months of 0 percent APR on balance transfers and 6 months on purchases, or 14 months on both purchases and balance transfers.

Unfortunately, the card requires a 3 percent balance transfer fee, but to make up for that fee, it also offers great rewards. Users receive 5 percent cash back in categories that rotate every quarter. This quarter, the card rewards spending at restaurants, and later this year shoppers will receive 5 percent back for spending on Amazon and wholesale clubs.

The Discover It also offers one of the best bonuses of any balance-transfer card. Discover matches all the cash back you earn your first year, effectively doubling your return. That could be a couple hundred dollars if you have the available credit to use the card for purchases. Plus, if you use those rewards to pay off your debt, you'll be out of the red even sooner.

Discover It

Payment goal
Total interest you'll pay
$2,500 in 1 year $75
$5,000 in 2 years $200 - $240
$7,500 in 3 years $635 - $945
$10,000 in 4 years $1,415 - $2,275
Source: CNBC Make It
  • Introduction period: 0 percent intro APR on balance transfers for 18 months and purchases for 6 months. Transfers must be completed within deadline provided, usually two or three months
  • Variable APR: 13.74 to 24.74 percent based on your creditworthiness
  • Balance transfer fee: 3 percent
  • Rewards: 5 percent cash back bonus on quarterly rotating categories on up to $1,500 in purchases. 2018 category features include spending at gas stations, wholesale clubs, grocery stores, restaurants and Amazon; 1 percent on all other purchases
  • Annual fee: $0
  • Bonus: Discover matches all cash back the first year
  • Notable perks: No foreign transaction fee

If you can't trust yourself

For those who don't always spend responsibly or make payments on time, the HSBC Gold MasterCard is a great choice. Many cards penalize late payments with fees up to $38, or worse: when you're late on a payment by more than 60 days, you could be hit with a penalty APR. In such a case, you could lose your introductory period and your APR could be raised to 30 percent indefinitely.

The HSBC Gold MasterCard protects you from that chance. It has no penalty APR and it waives a late payment once a year. One card with a similar structure, the Citi Simplicity card, waives all your late payments, but according to our analysis, the Gold MasterCard is still a better choice because of its lower variable APR, 12.74 to 20.74 percent, and lower balance transfer fee of 4 percent.

The card offers a long 18-month introductory period with 0 percent APR on purchases and balance transfers.

HSBC Gold MasterCard

Payment goal
Total interest you'll pay
$2,500 in 1 year $100
$5,000 in 2 years $245 - $275
$7,500 in 3 years $680 - $915
$10,000 in 4 years $1,450 - $2,080
Source: CNBC Make It
  • Introduction period: 0 percent intro APR on balance transfers and purchases for 18 months
  • Variable APR: 12.74 to 20.74 percent based on your creditworthiness
  • Balance transfer fee: 4 percent, or $10 minimum
  • Rewards: None
  • Annual fee: $0
  • Bonus: No penalty APR; Late fee waived once per year; No foreign transaction fee

How we decided

To determine which credit cards are the best for getting out of debt, CNBC Make It compiled a list of 25 highly rated cards, most of which are recognized as balance-transfer cards. Others are considered cash-back cards first, but still have features that help users get out of debt. We vetted each card based on its reward offers, introductory and eventual APR, annual fee, bonus, recommended credit score, late fee, balance transfer fee, foreign transaction fee, redemption rates, transfer options, customer reviews and extra perks.

We then estimated how long it would take and how much it would cost for each card to pay off various levels of debt — $2,500, $5,000, $7,500, $10,000 — at different monthly payment rates — including $100, $200, $300 and $400. In the figure below, depicting how much it will cost in interest to pay off various levels of debt at a payment rate of $200 per month, the estimates are based on average APRs within each cards' range. For instance, for the U.S. Bank Visa Platinum, which offers an APR of 11.74 to 23.74 percent, the estimates are based on an APR of 17.74 percent.

For each card, we also note how much it would cost, in interest payments, to pay off $2,500 in one year, $5,000 in two years, $7,500 in three years and $10,000 in four years.

The estimates depend on introductory APR periods, interest rates thereafter, the balance transfer fee and rewards. The figures are ranged based on the variable APR you might qualify for, which, like your credit limit, is determined by your creditworthiness. We did not factor into the estimates what you might earn from cash back or sign-up bonuses. That's because when you first transfer a balance onto these cards, you probably have little available credit, in which case you would not be able to use the card to make many purchases.

We did, however, consider each cards' reward structure while assessing each cards' overall value, since cash back becomes accessible after users pay off enough of their balance and have credit available. To estimate the monthly returns from rewards, we used expenditure data from the Bureau of Labor Statistics to make a sample budget broken down by average annual spending in categories like gas ($1,909), groceries ($4,049), dining out ($3,154) and general purchases ($12,833). The general spending category includes shopping, entertainment, public transit, vehicle expenses other than gas, some household costs and travel expenses.

The estimates assume you have a high credit limit and that you use your card for 90 percent of the purchases you make in these categories, accounting for instances where you have to use cash or shop somewhere that doesn't accept your card.

In the case of a flat-rate cash-back card, calculating the monthly return from rewards was relatively easy, as users save the same amount on all its purchases. For a card like the Discover It, meanwhile, we calculated the potential returns in each category, which change quarterly, and divided the annual sum by 12.

In short, each credit card was evaluated based on how quickly and efficiently it can help users get out of debt, its extra perks and its long-term value.

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