In keeping with a latest Covid-19 & Funds Survey carried out on-line by The Harris Ballot on behalf of TD Ameritrade, 22% of millennials ages 24 to 38 who acquired a stimulus examine already spent it, or are planning to spend it, on paying off bank card debt.With the typical millennial carrying $4,712 in bank card debt, it is a sensible transfer. If you happen to do not want your stimulus examine to afford your fundamental requirements, placing it towards your debt will prevent from the excessive curiosity that accrues while you carry a stability month to month. Paying off debt additionally lowers your credit score utilization price, which helps increase your credit score rating. Beneath, CNBC Choose takes a take a look at how paying off bank card debt can enhance your credit score rating.How paying your bank card debt helps your credit score scoreWhen customers pay down their debt, their credit score utilization price (CUR) decreases. Your credit score utilization price, additionally known as your debt-to-credit ratio, is a measure of how a lot credit score you’re utilizing in comparison with how a lot credit score you will have accessible. The quantity your utilization price decreases depends upon simply how a lot of your bank card debt you repay.Let’s take a hypothetical instance the place two folks with the identical credit score utilization use completely different quantities of the $1,200 stimulus examine to repay their bank card debt.In our situation, Julie and John each carry the identical bank card stability of $2,000 and have the identical credit score restrict of $5,000; thus, they share the identical credit score utilization price of 40% ($2,000 / $5,000 = 0.Four x 100 = 40%).Julie needs to make use of her complete $1,200 stimulus examine to repay her bank card debt, whereas John needs to make use of solely $600 of his and save the opposite half. Julie’s utilization price would lower to 16%, whereas John’s would solely lower to 28%. Julie John Present stability$2,000$2,000Present credit score restrict$5,000$5,000Present CUR40%40%Stability after stimulus cost$800$1,400Credit score restrict after stimulus cost$5,000$5,000CUR after stimulus cost16%28%Complete CUR drop24 share factors12 share pointsThe decrease your utilization price, the higher your credit score rating. Your objective as a cardholder is to intention for a excessive credit score restrict and a low stability throughout all of your bank cards. Consultants suggest sustaining a utilization price beneath 30%, with some even suggesting attempting for a single-digit utilization price (below 10%) to get the most effective credit score rating.Within the situation above, John’s new utilization price could be slightly below 30% whereas Julie’s could be nearer to 10%. How precisely this transfers to their particular person credit score scores depends upon their general credit score profiles. Credit score utilization makes up 30%, or one-third, of a credit score rating on the FICO model. Nonetheless, each John and Julie would each see a noticeable enhance of their scores.Bank cards that ease the burden of debt If you happen to do not wish to use your stimulus examine to repay debt, however you do have a lingering stability, contemplate a 0% APR bank card. If you happen to qualify, an stability switch bank card allows you to repay your present stability with out being charged APR, over six months or longer. The Citi Simplicity® Card presents an introductory 0% APR interval for the primary 21 months on stability transfers and the primary 12 months on purchases (after, 14.74% to 24.74% variable APR). For an extended zero-interest interval on each stability transfers and new purchases, the U.S. Bank Visa® Platinum Card presents 0% for the primary 20 billing cycles on each (after, 13.99% to 23.99% variable APR).For anybody on the lookout for a card with each a 0% APR interval and rewards on on a regular basis spending, the Amex EveryDay® Credit score Card comes with 0% curiosity for the primary 15 months on purchases and stability transfers (after, 12.99% to 23.99% variable APR) and 2X Membership Rewards® factors at U.S. supermarkets on as much as $6,000 per 12 months in purchases (then 1X), 1X Membership Rewards® factors per greenback spent on all different purchases.With the Wells Fargo Money Smart Visa® Card, cardholders can reap the benefits of 0% curiosity for the primary 15 months on purchases and qualifying stability transfers (after, 14.49% to 24.99% variable APR) whereas incomes 1.5% cash rewards on each buy they make.Needless to say making use of for brand spanking new credit score is more durable than it was earlier than the coronavirus pandemic. With issuers tightening their restrictions amid the financial fallout, you will wish to plan forward by gathering paperwork to show your earnings (one of many largest modifications for the reason that pandemic) and checking your preapproval earlier than you apply. The perfect 0% APR bank cards require having good or glorious credit score to qualify.For charges and costs of the Amex EveryDay® Credit score Card, click on right here.Details about the Citi Simplicity® Card, U.S. Bank Visa® Platinum Card, Amex EveryDay® Credit score Card, Wells Fargo Money Smart Visa® Card has been collected independently by CNBC and has not been reviewed or offered by the issuer of the cardboard previous to publication.Editorial Be aware: Opinions, analyses, opinions or suggestions expressed on this article are these of the CNBC Choose editorial workers’s alone, and haven’t been reviewed, accepted or in any other case endorsed by any third occasion.