If you’re like many Americans drowning in credit card debt with a never ending cycle of high interest payments and increasing balances, you’re not alone. There are many ways to get rid of that debt, but for those of you who do not have the option of getting a new job, a raise, or taking on a second job, here are a few tricks to help pay down those balances.
- Start with your lowest balance. If you’re looking to pay down multiple cards start with your credit card with the lowest balance. This way you can start to eliminate to one or two cards which give you negotiating power and transfer options. Of course you must also consider looking at cards with unusually high interest payments, but paying down the cards with the lowest balances will create achievement and also open up more options.
- Look for Balance Transfers. We’ve all received those offers in the mail which have 0% interest for balance transfers. If you have a card with a high balance or high interest rate then this may be a good deal for you. Think of it this way…If you have a card with a $5,000 balance and a 22% interest rate, a balance transfer with 0% interest will allow you to pay down $1,100 more in a year. Balance transfers are a great way to pay down 100% of your balance instead of pesky interest payments, but be sure to read the fine print and research the company before making any big moves.
- Negotiate. Too many consumers just accept their debt as is and don’t try to negotiate down those high interest rates. If you always make you payment on-time then you are a valued customer, and many times your Merchant will lower your interest rates if you threaten to leave. If you always pay on-time don’t be bashful! Your Merchant makes money by keeping you as a client, especially the ones who pays on-time.
- Look at loan options. For many getting out of debt of high interest payments is a never ending cycle of paying interest payments and maintaining a balance. Consider talking to your bank and taking out a loan to have one fixed payment. If you own a home with equity consider an equity loan or 2nd loan which should range from 6-12%. Paying on a personal or home loan is a better option than a high interest credit card payment and creates a path to eliminate your debt.
- Look at personal and family resources. Those of you that have “good credit” with friends and family members consider asking for a loan. I’ve had many clients obtain a personal loan from parents or family members, which if done reliably is another great way to pay down your balance with little to no interest.
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