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Yahoo
07-05-2025
- Business
- Yahoo
Preparing for a recession? Take advantage of these credit card benefits
Between tariff concerns, inflated prices, and rising debt delinquency rates, you might already be feeling some financial uncertainty. If and when a recession hits, there may not be much you can do to combat it on an economic level, but you can protect your own wallet. Building an emergency savings fund, sticking to a budget, and getting ahead of high-interest debt balances are all good places to start. But you can also benefit from having the right credit card to stretch your budget with special financing options, lower interest rates, and added rewards. Read more: Our picks for the best credit cards right now Are we in a recession? Despite increased prices and economic uncertainty, we aren't technically in a recession right now. A recession is a period of economic decline that lasts for more than a few months, according to the National Bureau of Economic Research, and is both significant and spread throughout the economy. Though it's not the only indicator, a generally accepted recession marker is at least two consecutive periods of negative economic growth — or contraction. By this measure, the economy contracted by 0.3% in the first quarter of 2025, but before that GDP grew by 2.4% annually in the last quarter of 2024. So while we aren't officially in a recession right now, there are signs that a downturn could be on the horizon — including rising expectations from experts and economists. Even if you can't predict when you might begin to feel the effects of an economic downturn, you can still prepare. Here's how credit cards may play a role in helping you stay afloat. 5 ways credit cards can help during a recession A credit card can help you fight financial hardship in the following ways: 1. Use introductory APRs to tackle debt Credit cards can have sky-high annual percentage rates (APRs). According to Federal Reserve data, the average APR for cards that assessed interest was 21.91% as of February 2025. However, some credit cards have special intro APRs, usually offering 0% interest on new purchases or balance transfers for a limited time. These offers give you time to pay down your balance without interest and get out of credit card debt faster, freeing up cash for other goals, such as saving or investing. You can also use an offer like this to make a large purchase and pay it off over time without interest fees. For example, the Capital One Savor Cash Rewards Credit Card has a 0% APR intro offer for several months after opening on both purchases and balance transfers. After that introductory period expires, the standard APR will apply to any remaining and future balances. Capital One Savor Cash Rewards Credit Card Learn more Read more: Capital One Savor Cash Rewards review But don't wait for a recession to pay down your debt — you can benefit even more by starting now. Balance transfer credit card offers can dry up during periods of economic downturn — credit card companies may lower the length of 0% APR intro periods and tighten lending standards so you'll need a much higher credit score to qualify. If you already have good credit and can qualify for a balance transfer card to pay down existing debt, you may save more in the long term by choosing a 0% APR offer now. Read more: Best balance transfer credit cards 2. Take advantage of other low-interest options Even after intro periods end, some credit cards have special financing options that function like buy now, pay later programs. These typically allow you to split up a large purchase into monthly installments at 0% APR. While you won't pay your card's regular interest rate, you will take on a monthly fee and can face penalties for late or missed payments. For example, with a card like the Blue Cash Preferred® Card from American Express or Blue Cash Everyday® Card from American Express, you can use Amex's Plan It feature to pay off an eligible purchase over a period lasting up to 12 months. Here's a look at an example Plan It payment plan for a recent purchase totaling $174. If I were to opt into any of these plans, I would pay more than the original total, but still a lot less than if I were unable to pay the charge off at all and let it accrue interest. By using these programs, you can take advantage of interest-free financing to make major purchases, such as new appliances, and keep cash free for other necessary expenses. Make sure to read the fine print of any payment plan before you opt in, though. You should know the possible fees and penalties as well as how much you'll pay over the full plan term. And remember — your credit card shouldn't be your first option when you take on an unexpected expense, even if you do have access to financing options. Start building an emergency fund today so you'll have money saved if your financial situation changes after a layoff or job loss during a recession. 3. Earn cash back, points, or miles rewards With a rewards credit card, you can save on future purchases when you make routine, monthly expenses, such as your utility bills and groceries. To make the most of these rewards, pay your statement balance in full each month and avoid costly interest charges that could reduce your rewards earnings. For example, the Chase Freedom Unlimited® card offers a flat 1.5% cash back or more on all purchases. If you spent $1,000 per month with your card, you could earn $180 in cash-back rewards over one year. And when you spend money in the card's bonus rewards categories, you can boost your annual rewards even more. Read more: Chase Freedom Unlimited vs. Freedom Flex Taking advantage of credit card rewards helps you get more value for your money. Depending on the type of rewards you earn, you can redeem them toward airfare, hotels, and other travel expenses. But you can also redeem your rewards for deposits to a bank account or statement credits to your card account to help pad your budget. 4. Utilize cardmember portals If your credit card issuer has a shopping portal or discount page, download the issuer's app or install its extension on your browser to click through and apply discounts or boosted rewards on your purchases. When you already have a purchase planned, these portals can help you stretch your dollars further. For example, you can use the Shop through Chase portal from Chase Ultimate Rewards to click through and earn extra points with dozens of online retailers, including places you might buy everyday essentials like CVS, Walmart, Verizon, PetSmart, Sam's Club, and more. Some credit card issuers, including Citi, Chase, and American Express, also have 'offers' with brands for exclusive deals and automatic discounts you can use only after opting in through your card account. These offers are often targeted based on your spending and location, and they do expire, so you can benefit from checking your account regularly. Read more: Amex points vs. Chase points — Which is the better rewards program? 5. Find a lucrative welcome bonus offer If you're shopping for a new credit card, you may benefit from welcome offers offered only to new cardholders. These special offers give you bonus cash back, airline miles, or points if you meet your new card's spending requirement within the specified time period. Read more: The best credit card sign-up bonuses If you open a Capital One Quicksilver Cash Rewards Credit Card, for instance, you can earn a $200 cash welcome bonus if you spend $500 or more on new purchases within the first three months. Capital One Quicksilver Cash Rewards Credit Card Learn more Read more: Capital One Quicksilver review Welcome bonuses can typically be redeemed for cash back, gift cards, travel, and more. Just be sure you can comfortably meet the minimum spending requirement before you apply. If you have to go into debt to earn the bonus, you could end up in a worse spot than where you started. You should also make sure the credit card you choose works for your spending long term — aside from its great bonus. Otherwise, the card could end up costing you more than its value is worth (especially if it has an annual fee), and you may forfeit the rewards earnings you would have gotten with a better card for your budget. Tips for using your credit card Although credit cards can be useful tools during a recession, they can also become costly. Here's how to avoid interest, fees, and other costs so you're able to fully maximize your credit card benefits. 1. Pay off the balance in full every month To maximize any credit card's value, you must avoid paying interest charges. Aim to pay off your statement balance in full each month by the bill due date so you can earn rewards without paying high interest fees. Track your spending so you know exactly how much you're putting on your card each month. It's smart to use your credit card like a debit card and only spend what you know you have in the bank so you can pay it off when your balance is due. Read more: What happens if I only pay the minimum payment on my credit card? 2. Keep track of rewards categories Although there are several cash-back credit cards with a flat rewards rate, some of the best cards have staggered or rotating rewards categories with higher reward rates on certain expenses, such as groceries, subscriptions, or dining out. If you have multiple cards, make sure you know which cards earn the highest reward rates in your frequent spending categories. You might use one card for 3% on your weekly grocery haul and filling up at the gas station, for example, while you have another card with 2% flat rewards on all other non-bonus category spending. Some people find it helpful to manually track their credit card reward categories on their phones, but you can also use apps such as AwardWallet or MaxRewards to manage your cards. 3. Stick to a budget Credit cards can help you save money and earn rewards on planned purchases and regular spending. But use caution. Credit cards can also make it easy to spend more than you intended, and if you carry a balance, the interest charges you'll pay will only add to any financial hardships you may take on in a recession. Create a budget and track your spending to ensure you stay within your means. Then, you can pay your balances in full each time you make a monthly payment to avoid unnecessary interest charges. You don't have to DIY a budget spreadsheet to get started — consider using a common method like the 50/30/20 rule or budgeting apps and online tools to help you manage your finances. This article was edited by Alicia Hahn. Editorial Disclosure: The information in this article has not been reviewed or approved by any advertiser. All opinions belong solely to Yahoo Finance and are not those of any other entity. The details on financial products, including card rates and fees, are accurate as of the publish date. All products or services are presented without warranty. Check the bank's website for the most current information. This site doesn't include all currently available offers. Credit score alone does not guarantee or imply approval for any financial product.
Yahoo
05-03-2025
- Business
- Yahoo
The best 0% APR credit cards for 2025: Avoid paying interest for up to 21 months
Here are the best options today and more about how to best use a 0% APR card. Why we like it: The Capital One Savor Cash Rewards is one of the best credit cards for everyday earning because of its excellent rewards rate. With uncapped and elevated 3% rates in multiple categories, you can earn high amounts of cash back on purchases you're already making, including groceries. As an added bonus for travelers, this card doesn't charge foreign transaction we like it: The Capital One VentureOne Rewards makes sense if you want to earn straightforward travel rewards on your everyday spending. With no confusing bonus categories and no foreign transaction fees, you can focus on earning miles for your next we like it: The 0% introductory rate might be the starting point with the Chase Freedom Unlimited, but it provides much more in ongoing potential, especially if you like flexible redemptions. With its higher base rewards rate and useful spending categories, you can fuel your travels with rewards earned from everyday purchases or opt for cash-back rewards. Why we like it: On top of its long intro APR offer, the Amex Blue Cash Everyday also provides an excellent mix of elevated rewards and ongoing benefits, all with no annual cardmember cost. While you might find a card with a few of these perks, it's rare to find one that has them we like it: The Amex Blue Cash Preferred has one of the highest cash-back rates available for making purchases in common spending categories, especially for a low-annual-fee card. This is an excellent card if you want to turn your everyday purchases into valuable cash-back we like it: The Wells Fargo Reflect is one of the best cards available for a long 0% intro offer on its APR. Having 21 months of 0% intro APR on purchases and qualifying balance transfers means you get, on average, six to nine months more time to avoid paying interest than other similar we like it: Few rewards credit cards provide more than 2% or 3% back on purchases, but you can earn up to 5% cash back with the Discover it Cash Back Credit Card. You do need to keep track of quarterly categories and activate them, but that's a small price to pay for the amount of rewards you can earn on common generally recommend the cards on our best list if you're looking for 0% intro APR offers, but here are some additional credit card offers that can work depending on your situation and preferences. Why we like it: The Citi Custom Cash makes sense if you want your rewards rate to reflect your top purchases each billing cycle. With this card, you earn 5% back in your top eligible category on up to $500 each billing cycle. That means you could earn 5% back on restaurants one month and 5% back on grocery stores after that, giving you plenty of flexibility with your earning we like it: The Bank of America Customized Cash Rewards lets you customize how you earn rewards by choosing a 3% cash-back category once per calendar month. This gives you some flexibility with earning more cash back as you align your choice category with your upcoming we like it: The U.S. Bank Cash+ Visa provides up to 5% cash back with its rewards rate, which is among the highest rates you can find on rewards credit cards. There's a limit on how much you can earn at this rate each quarter, but it's a reasonable cap of $2,000, especially for a no-annual-fee card. It's also nice that you have the option to choose two 5% categories each quarter, giving you flexibility over how you earn rewards. A 0% intro APR credit card lets you avoid paying interest on purchases for a set period of time. This allows you to carry a balance without worrying about racking up any interest until the end of the introductory period, though a high balance could affect your credit score and you're still responsible for making minimum payments. The intro period starts upon account opening and typically lasts 12 to 15 months, with some longer offers lasting 18 to 21 months. Unlike most balance transfers, you don't have to pay a fee to take advantage of a 0% purchase APR. However, you still want to pay off your balance before the promotional period ends. Otherwise, interest will start to accrue. Read more: What is APR on a credit card? 0% APR offer length: In general, the longer the intro period, the better. However, the average length of 12 to 15 months should be good enough for most people before the variable APR kicks in. Balance transfer offer: Many of the cards on this list are also balance transfer credit cards because they have 0% intro APR offers on balance transfers. You can take advantage of these offers to transfer existing debt to one of these cards and not pay interest during the offer period. You still have to cover a balance transfer fee and you can only transfer up to your available credit limit. Annual fee: We typically only recommend paying an annual fee on a credit card if you get enough value from the card's benefits to offset the yearly membership cost. Fortunately, the best 0% APR credit cards don't tend to have annual fees. Rewards program: What are you supposed to do with a 0% APR card after the offer period ends? If it's a rewards card, you can continue using it to earn valuable points, miles, or cash back on your purchases. Credit requirements: Many 0% APR credit cards require a good or excellent credit score to qualify, which is at least a 670 FICO score. APR: Most credit card annual percentage rates are high, so it's typically not best to choose between cards based on the APR unless there's a 0% intro APR offer. It can make sense to apply for a 0% intro APR credit card for multiple reasons: You have existing debt. You can use a 0% APR credit card as a way to help cover new purchases without accruing interest. This can give you some room in your budget to pay off existing debt. You have upcoming large purchases. You can use a 0% APR credit card to make a large purchase and then take your time (during the introductory offer period) to pay it off without interest building. This lets you hold onto cash for other necessary purchases while still making interest-free payments. It's an emergency. This type of situation can vary, like being between jobs, but you can use a 0% APR credit card to make necessary purchases without interest accruing. The important thing to remember is that 0% APR credit cards are still credit cards. When you use credit, you're borrowing money from a financial institution that you have to repay, whether there's interest or not. That means it's still essential to responsibly use credit cards by making on-time monthly payments by the due date and not borrowing more credit than you can afford. It's worth noting that carrying a large balance on a credit card, even during a 0% introductory offer period, can negatively impact your credit score because of high credit utilization, or the percentage of the total amount of credit you're using. Credit cards with long 0% introductory APR offers include: Blue Cash Everyday® Card from American Express Chase Freedom Unlimited® Capital One Savor Cash Rewards Credit Card Wells Fargo Reflect® Card Discover it® Cash Back Citi Custom Cash® Card Bank of America® Customized Cash Rewards Credit Card U.S. Bank Cash+® Visa Signature® Card Getting approved for a new card with a 0% intro rate can be an excellent way to reduce credit card debt. The promotional period lets you pay your balance without worrying about interest charges, which is often better than alternative repayment strategies, such as using a cash advance from another credit card. You typically need good to excellent credit to qualify for a 0% APR credit card. That's a FICO score of at least 670 and a VantageScore of at least 661. A higher credit score could improve your chances of getting approved for a 0% interest credit card. A 0% interest rate credit card can hurt your credit if your credit utilization is too high from carrying a high balance. You could also see a small impact on your credit score from applying for a new card. However, a 0% intro APR credit card could help with building credit over time and increasing your overall creditworthiness if you keep your card account active and make on-time payments. To find the best 0% APR cards today, we started with a list of all cards from major credit card issuers that offer an introductory 0% APR, which was nearly 30 eligible credit cards. This list did not include every available card from every credit card company. We added the cards from this list to a rubric to rate each card based on various criteria, including 0% intro APR periods, rewards, annual fees, and more. Our final list includes highly-rated cards, based on our rubric, experience, and expert opinion, that we think could make sense for people researching 0% APR credit cards. Editorial Disclosure: The information in this article has not been reviewed or approved by any advertiser. All opinions belong solely to Yahoo Finance and are not those of any other entity. The details on financial products, including card rates and fees, are accurate as of the publish date. All products or services are presented without warranty. Check the bank's website for the most current information. This site doesn't include all currently available offers. Credit score alone does not guarantee or imply approval for any financial product.
Yahoo
05-03-2025
- Business
- Yahoo
How to consolidate credit card debt
Consolidating your credit card debt can help you organize everything into a single monthly payment and save money with a lower overall interest rate. Two popular strategies include using balance transfer credit cards and debt consolidation loans. Debt consolidation is combining all your existing debt in one place. You can consolidate credit card debt with a balance transfer credit card or loan from a bank or another financial institution. Related: Best ways to pay off credit card debt Credit card debt consolidation is right for you if it helps pay off your debt. The point of debt consolidation is to lower your interest charges and organize your debt in one place so it's easier to track. If available debt consolidation strategies can't lower your overall interest rate, consider other debt-payoff strategies, including budgeting. Credit card debt consolidation pros It can organize your debt into one monthly payment It can save you money with a lower interest rate It can help you get out of debt quicker It can improve your credit score with on-time payments Credit card debt consolidation cons It can temporarily impact your credit score if you apply for new credit accounts or have a high credit utilization It might not help you get out of debt You might not qualify for the best offers You can transfer existing debt from multiple sources to a balance transfer card and then manage your debt in one convenient location. This typically only makes sense if the card you're transferring debt to is a 0% APR credit card. A credit card with a 0% introductory APR (annual percentage rate) offer on balance transfers lets you avoid paying any interest on transferred balances for a certain amount of time. You still have to pay a balance transfer fee on most cards, but it could be worth paying if you save more money on interest. Consider the difference between paying off credit card debt with and without using a balance transfer card with a 0% intro APR offer. Scenario A Scenario B Scenario C (0% APR offer and high payment) No 0% APR offer and minimum payment 0% APR offer and minimum payment 0% APR offer and minimum payment Debt $10,000 $10,000 $10,000 Interest rate 20% 0% intro APR for 12 months 0% intro APR for 12 months Balance transfer fee (5%) N/A $500 $500 Monthly payment $265 $267 $850 Time to pay off 59 months 49 months 12 months Interest paid $5,893 $3,029 $0 Total paid $15,893 $13,529 $10,500 The examples above show how a balance transfer offer could save you money, even if you don't fully pay off your balance during the 0% intro APR period. However, we recommend paying as much of your debt off as possible during the promotional period, as that will save you the most money on interest. Check out our reviews of each card: Chase Freedom Unlimited: How to get an extra $300 back in your first year Capital One Savor Cash Rewards review: Unlimited cash back for no annual fee Amex Blue Cash Preferred Card review: Big grocery rewards and more everyday savings A credit card debt consolidation loan can be used to pay off your existing debt so you have one monthly payment and a lower rate. Consider the following debt situation where you could use a debt consolidation loan: Credit card 1 Credit card 2 Credit card 3 Balance $20,000 $10,000 $5,000 Interest rate 20% 18% 25% Average interest rate 21% Total balance $35,000 If you qualify for a sufficient loan amount and favorable loan terms, you could save on interest as you work to pay off your debt. Even better, you would only have one payment to worry about rather than three. Debt consolidation loan requirements could include the following: A valid Social Security number Be at least 18 years old A physical address A minimum income that's determined by the lender (bank, credit union, or other financial institution) A good credit history and/or credit score (it's common for lenders to issue credit checks, which can temporarily impact your credit score and show up on your credit report) Personal loans can be used the same way as debt consolidation loans to organize your debt and save money on interest. Depending on the financial institution, a personal loan could be labeled as a 'debt consolidation loan.' That means they're the same thing and often have the same requirements. A home equity loan or home equity line of credit (HELOC) lets you borrow money against your home's equity. With a home equity loan, you receive a lump sum of money that you have to pay back with interest, typically at a fixed rate, over a certain number of years. A HELOC lets you borrow money from an open line of credit, and you pay interest on the amount borrowed. You can use either option to pay off credit card debt from multiple sources. The strategy with using these options is to make sure the amount you pay in interest is lower than what you're currently paying on your credit card debt. Home equity loan and HELOC requirements could include: Home equity A favorable debt-to-income ratio A positive credit history Sufficient income Paying closing costs A 401(k) loan lets you borrow money against your retirement savings. You have to pay the loan back with interest within a certain amount of time, and you could be on the hook for paying taxes and incur a penalty if you default on the loan (can't pay it back). We don't generally recommend taking out a loan against your 401(k) without careful consideration because it could derail your retirement savings plan. You would have to thoroughly review the situation to see if paying off debt with the money you'll likely need when you retire makes sense. Credit counseling organizations can offer debt management or debt repayment plans where you pay the organization and they make payments to your creditors. This could be a useful debt consolidation option for paying off different types of debt. That would only be the case if the organization negotiates with your creditors to lower your interest charges or balances due or negotiates other favorable terms of debt relief. Things to be aware of with credit counseling organizations: You might have to pay a fee for these types of services. Be sure to review the plan's terms and conditions, including repayment terms. Not all organizations are reputable, and scams do exist within this industry. The U.S. Department of Justice has a list of approved credit counseling agencies you can browse. Debt consolidation isn't the only way to take control of your debt and eventually become debt-free. As you consider your financial situation and options, keep these popular budgeting strategies in mind. The debt avalanche method focuses on paying off the debt with the highest interest rate first. As you pay off one debt, you move to the debt with the next highest interest rate. The point of this strategy is to save money by paying off the high-interest debt first and as fast as possible. Credit card 1 Credit card 2 Credit card 3 Balance $10,000 $5,000 $3,000 Interest rate 18% 25% 20% Using the debt avalanche method in this example, you would put your payments toward the balance on credit card 2 first, then credit card 3, and then credit card 1. The debt snowball method is similar to the avalanche method but focuses on paying off the smallest amount of debt first rather than the debts with the highest interest. This strategy aims to build momentum as you move from paying off one balance to another. It might not save as much money as the avalanche method, but it can help keep you motivated. Credit card 1 Credit card 2 Credit card 3 Balance $10,000 $5,000 $3,000 Interest rate 18% 25% 20% Using the debt snowball method in the same example, you would put your payments toward the balance on credit card 3 first, then credit card 2, and then credit card 1. Related: What's more important — Saving money or paying off debt? Debt consolidation can hurt your credit score if you apply for a new balance transfer card or debt consolidation loan. Your score could also go down from high credit utilization on a balance transfer card, as well as a new credit account lowering the average age of your accounts. However, these effects are typically temporary, especially if you make on-time payments as you work to pay off your debt. Debt consolidation can be worth it if it helps you pay off your credit card debt. The purpose of debt consolidation is to organize all your debt in one place at a lower interest rate than what you were collectively paying before. It's likely worth it if you can do this with a balance transfer card or loan, owing less money overall and making it easier to track payments. Consolidating credit card debt has two purposes: it lowers your overall interest rate on all your debt and organizes it in one place. This makes tracking your payments easier and lowers the interest you pay throughout the debt-payoff process. It depends on the financial institution and their requirements, but you typically need to provide personal and financial information, often including your Social Security number and income. Your credit history and debt can also factor into the qualification process, so having a good credit score is typically beneficial. Some of the best methods to consolidate credit card debt include using balance transfer credit cards and loans. With either of these options, you can consolidate your debt in one place, making it easier to track. However, debt consolidation typically only saves you money if it also lowers your overall interest rate. This article was edited by Rebecca McCracken Editorial Disclosure: The information in this article has not been reviewed or approved by any advertiser. All opinions belong solely to Yahoo Finance and are not those of any other entity. The details on financial products, including card rates and fees, are accurate as of the publish date. All products or services are presented without warranty. Check the bank's website for the most current information. This site doesn't include all currently available offers. Credit score alone does not guarantee or imply approval for any financial product.
