Can you use credit cards to get out of debt? What borrowers should know now

Credit card debt has reached staggering heights nationwide, with cardholders now carrying over $1.23 trillion in outstanding balances. And, credit card rates have been sitting close to record highs over the past year, which means that the cost of carrying that debt has only gotten steeper. With the average credit card APR now hovering over 20%, many card users' balances are growing rapidly despite making regular monthly payments. 

What may be surprising, though, is that the very tool that got you into debt could also be your way out. Credit cards, when used strategically, may help borrowers reduce their debt burden and save significantly on interest charges. The problem is that without a clear understanding of what works and what doesn't, using your credit cards to try and get out of debt might make your situation worse. 

So, can you really use credit cards to get out of debt, and if so, how exactly can you turn your cards from a source of financial stress into a powerful debt elimination tool? That's what we'll examine below.

Find out more about the credit card debt relief strategies available to you now.

Can you use credit cards to get out of debt?

Yes, you can use credit cards strategically to tackle existing debt. In fact, one of the most effective methods is taking advantage of balance transfer offers. Many credit card issuers offer promotional periods with 0% APR on balance transfers that typically last between 12 to 21 months. By transferring your current high-rate balances to one of these cards, you can freeze your interest charges temporarily and put every dollar of your payment toward the principal balance. This can save you hundreds or even thousands of dollars in interest over the promotional period.

That said, there's usually a balance transfer fee involved, which is typically 3% to 5% of the amount transferred. However, this one-time cost is often far less than what you'd pay in interest on your original card. You'll still need to do the math to make sure it works for your situation, though. And, you'll also need a solid plan in place to pay off the transferred balance before the promotional period ends. Otherwise, your card rate will increase significantly once it expires, landing you back in the same credit card debt cycle.

Another strategy that may be worth considering is to use a credit card with a 0% introductory offer on new purchases. If you're juggling essential expenses, like medical bills or car repairs, and want to avoid taking out a personal loan or using one of the high-rate cards in your wallet, a 0% introductory purchase APR card can help temporarily. These offers let you make interest-free purchases for a limited time. But you'll need to pay off those charges before the promotional window closes to avoid hefty back-end interest. As a result, it's typically best to use this approach for short-term liquidity, not as a long-term fix.

Chat with a debt relief expert about the options that make sense for your situation today.

What other debt relief strategies should you consider?

If balance transfers and promotional purchase APRs aren't enough, the good news is that those aren't your only options. There are numerous debt relief strategies you can use to get rid of your high-rate card debt.

For example, a debt management plan through a credit counseling agency might be worth exploring. These programs negotiate with your creditors to reduce your interest rates and fees while consolidating your payments into one monthly amount paid to the counseling agency. Those funds are then distributed to your creditors by the credit counseling agency. Your credit cards are typically closed during this process, but this approach can provide structure and potentially lower rates than you'd get on your own.

Pursuing debt forgiveness is another option, though it comes with more serious consequences than debt management does. When you take this route, you'll typically work with a debt relief company to negotiate with your creditors on settlements that are less than what you owe. This can result in paying 30% to 50% less (or more) than what you currently owe, but the process can damage your credit temporarily. There's also no guarantee of success.

For homeowners who have significant home equity but overwhelming debt, home equity loans or home equity lines of credit (HELOCs) may offer another path. These products allow you to borrow against your home equity, typically at a much lower interest rate than you'd get with credit cards, since this type of borrowing is secured by your home. However, this strategy converts unsecured debt into secured debt, and that puts your house at risk if you can't make payments.

Bankruptcy should be a last resort, but it may be the most practical option for those who are truly unable to manage their debt load. For example, Chapter 7 bankruptcy can eliminate most unsecured debts, while Chapter 13 creates a court-supervised repayment plan. Both have long-lasting credit implications but offer a fresh start when other options won't work.

The bottom line

Credit cards can be powerful tools when used strategically, but can also be dangerous traps when handled carelessly. If you're considering using a credit card to get out of debt, focus on offers that help lower your costs, not increase them. 

For those with larger or older debts, working with a debt relief company, consolidating through a personal loan or taking another approach entirely may be the smarter move. Whatever route you decide on, though, it's important to act now. Every month you delay means more interest compounding. The sooner you take action, though, the sooner you can truly break free from debt.