I have a new car loan for $12k at 7.74%, and about $10k in old credit card debt that I just transferred to a card with a ~20% APR after the initial 13 month zero-interest promo. (So, I am not being charged interest on the credit debt until 2021.) I make minimum payments of $250 on the car loan, and 2x minimum ($65) on the credit card every month.

I also have an extra $400 in my monthly budget to put towards debt. Normally I "avalanche" debt and pay the higher rate accounts first but I'm confused as to which account to pay now because of the zero-interest promo.

Should I:

  • Pay an additional $400 toward the credit debt during the 0% promo and try to reduce it by $5580 in 12 months? This way I'm only charged 20% interest on the remaining $4400?
  • Pay all $400 to the car loan since it is currently charging interest, and try to reduce my principal by a third ($4800) in the first year?
  • 4
    I think this would best be answered by building a spreadsheet and trying a few different scenarios.
    – glibdud
    Nov 13, 2020 at 16:51
  • 1
    The relevant question here is whether you'd be able to pay off the credit card debt in one payment, just before the 0% interest period ends. (Or possibly transfer the balance to another card with a 0% period.)
    – jamesqf
    Nov 13, 2020 at 16:58
  • FYI, "snowball" method of paying debt is paying the lowest balance -> highest balance. Paying highest rate -> lowest rate is usually called the "avalanche" method.
    – Nosjack
    Nov 13, 2020 at 17:01
  • I think we should edit the title. "Deferred interest" has a different meaning than a promo rate that goes up after it expires. Deferred means you have to back pay interest if you haven't paid off the debt in time.
    – TTT
    Nov 13, 2020 at 17:27
  • 1
    Read the fine print for the CC Debt. Some of them zero-Interest promo APR would charge the entire 13 month interest for the amount remaining after the promo period ends.
    – Viv
    Nov 13, 2020 at 18:53

2 Answers 2


2021 is in 7 weeks, or as long as 59, if the zero is through the end of the year. As stated in a comment, best to build a spreadsheet which will make the answer clear, and precise to within a few dollars.


Talk to your local bank or credit union. There is another possible option. You might be able to refinance the car loan. That would lower the interest rate, and the required monthly payment.

That reduced monthly payment on the car loan might allow you to use the same amount of cash each month to retire the credit card debt before the rate goes up, or before you need to make another switch.

To decide you will have to use a spreadsheet to determine how much money it will take to retire both debts under different scenarios.

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