Different Ways to Pay Off Credit Card Debt
Credit cards can both be your best friend as well as your worst enemy — and what they turn out to be, it depends on how you use them. Use them wisely and in emergencies, and they will be your friends for life — use them recklessly for compulsive shopping and they will turn into blood-sucking monsters.
So, if you are in a situation where you find that accumulated credit card debt is snapping at your financial heels, then it is time for credit card debt elimination. Here are a few practical ways how you can pay off credit card debt:
1. Use your credit card for emergencies only: It is impossible to altogether stop using your credit card. But it is definitely possible to use it strictly only for making emergency payments. So, step one is to stop using your credit card for luxury shopping, traveling, entertainment and eating out, and focusing its use on absolute necessities such as gas, groceries, etc.
2. Pay more than the minimum credit card debt: Credit card companies are tricky guys — they tell you they are making life easier for you by paying only a small percentage (2 to 3%) of your outstanding, and then they charge you a whopping interest on the unpaid balance. The result is disastrous — you keep spending more and paying only the minimum due, and your debt keeps accumulating. Therefore, if you want to get rid of credit card debt, you must pay more than the minimum amount due. Gradually, the interest amount will keep coming down and you will be able to repay the outstanding amount in a phased manner.
3. Take a home loan: Sure, the sub-prime market crash may have made taking a home loan an onerous task, but if you have a home and a whole lot of credit card debts, then mortgage your home, take a low-interest loan, and repay off the high-interest credit card debt. Remember, interest paid on home loans is a deductible expense and that is another benefit you derive with these loans. Of course, the primary advantage is that you are using this cash for repaying that monster credit card debt that is hanging around your neck!
4. Borrow from other sources: if you do not have a home to mortgage, then consider borrowing using your life insurance policy or your 401(k) plan. However, remember this: when you are borrowing to repay off expensive credit card debt, then you must not begin splurging once you square it up. Adopt austerity measures and concentrate on paying off the new loan in your life.
5. Shift balances: Analyze your credit cards and you will find that some of them have a lower rate of interest. If you do have such low interest cards, then shift the outstanding balances from your high-interest cards to these.
6. Negotiate with the credit card companies: If nothing else seems to be working, then it’s time to have a sit-down with your credit card company and place the cards on the table. Tell them that you are unable to pay the outstanding balances, and if they want their money back they will have to restructure the credit card debt. Every credit card company will sacrifice something to get their outstanding back, and nine times out of ten they will plan a good repayment deal for you.
That was how to pay off credit card debt faster. We hope the information was useful. And, good luck to you on finishing off your unwanted credit card debt.
Watch the video related to
credit card debt
Lorenzo Fenix Presents: An in-depth account of the ins and out of the credit card business in America. In Debt We Trust was written, Produced and Directed by Dannny Schechter. Once you watch this movie, you’ll gain valuable insight into the credit card game.
Help answer the question about credit card debt
What should I do about credit card debt? Do I have to pay it off before I can save for a house?
I'm 26 years old, I make about 50k a year and I want to start thinking about buying a house. What should I do with this nagging credit card debt? Aside from car payments, the only other debt I have is $5,000 on one of my credit cards. Can I think about saving for a house, or should I pay it off before I even consider it? Thanks.
About Author
Paul Sarwana offers credit card debt reduction tips to help debtors build confidence in improving their financial situation. Continue reading to get more tips on how to pay off credit card debt plus learn ways to reduce credit card debt and become debt free.
Comments
KITE the credit card companies!!!
1. use low introductory rate (0.9%) offers to your advantage
2. ensure you set monthly payments to ‘automatic’ payment
3. use the credit available to pay-off ‘purposely created’ debt
4. pay ONLY the minimum amount
5. withdrawn from Bank ‘A’ line of credit, paid off thru Bank ‘B’ issued credit cards…
6. invest the withdrawn amount at Bank ‘C’ at 4.1 %
7. before the low rate offer expires, pay it off by withdrawing from your investment
What if you have no assets.
I used to work for a large credit card issuing bank, so I feel I can offer some advice.
Bankruptcy is not an option for you- unless you are unable to work hard to repay your obligation. If you are capable of working a decent paying job, you will regret bankruptcy for the next 7 years or longer. That's probably a lot longer than it would take if you sucked up some tough months and paid your bills.
It's not likely for you to obtain a credit card with a lower interest rate- at least not one which can accomodate your total debt. You don't indicate what your credit history is, nor do you indicate your credit score.
However, there is something not quite right because you indicate you're paying 22 percent on your cards. Incedentally, 29.99 percent falls into usury in most states- in other words, you're paying more interest than the value of the loan. That's considered illegal and the creditor cannot pursue collection of debt from you.
Some states allow the market to dictate the usury limit, but again, most states do not allow above 24 percent.
In any regard, there must be something sketchy about your payment or credit history if you're paying more than 8-12 percent for credit card debt.
The best two options would be a home equity loan- you can usually get a much lower rate- but consider this- are you looking to make any improvements or possibly move over the next few years?
Also, look into a consolidation loan from your bank. It's not debt management, so it won't appear on your credit report as such. Debt management companies negotiate with your creditors to accept lower payments in an effort to pay your obligation. Good for your wallet, bad for your credit score.
A consolidation loan will pay your creditors in full while you make payments to your bank. Your bank will most likey ask you to close your accouts, which is good because you won't generate further interest, and your accounts will show as "paid in full as agreed". It will also cut off any temptation you may have to use your cards as credit becomes available, since they'll be closed.
Once you pay off the debt, you're in the clear to re-apply for new cards, and you will be in better position for new rates.
Make certain to ask if you pay more than the monthly amount whether it goes to principal or to interest. If it goes to principal, pay as much as you can above minimum each month. You're going to have to suck it up and grow up a little- live frugally and poor.
I also suggest not opening more than one card. A good rule of thumb is to live below your means, that is if you plan on saving for the future. If you can't pay in cash, (a house or a car being two exceptions) you don't need it right now.
The advantage of a consolidation loan over a home equity loan is that you're not using the equity (or your home) as collateral.
Good luck.
Call the credit card company and see if you can make some type of agreement to get the interest rate lowered. If you have good credit and are on time paying your bills, you might be able to get the rate lowered. You could also go to a local credit union – talk to someone about a personal loan. Much lower interest rates! Plus – maybe you can sell one of the used cars – do you really need 2? For school tuition, you should look into student loans – payments are deferred until after graduation and interest rates are extremely low. Don't transfer this to another credit card – you'll just bury yourself even further.
Look into debt consolidation, but if this is your only card, then see if you can get another card with a lower rate and ask if you can transfer the balance.
NEVER use a CC for a purchase that you can't pay for by the end of the month. No point in getting a good deal on a purchase if you take many months to pay it off.
Paying CC interest is the same as burning money. I was young once and in that same boat. I wasted sooo much $$ in interest…
KITE the credit card companies!!!
1. apply for another card at the same credit card company (ensure card 1 is fully paid)
2. the ‘new’ card will carry a minumum of $ 5,000 credit limit
3. ask the credit card company to ‘consolidate’ card one credit limit onto the newly issued card two
4. close down card one
I was able to increase my $ 50,000 maximum credit available to a whooping $ 75,000 … used it to pay off ‘purposely created debt’..which I use to invest
a a high rate at another bank
wanna eliminate debt?
just don’t use a credit card.
use cash
only spend what you have.
Debt consolidation is also provided by credit-counseling firms. These firms will total up all your monthly debts and let you make one payment to them. With this amount, the firm will pay the lenders till the entire debt is cleared off. But exercise caution while selecting a credit-counseling firm, since some firms do not offer free services. People who have utilized debt counseling will assist you in choosing the right firm. The other option is to go for a debt consolidation loan that has quite a low interest rate.
Pay off your credit card debt by cashing in your investment one week before your credit card low interest rate expire!!!
KITE the credit card companies before they get all absorbed (nationalized) therefore before government finds a way to pin you down to your debts for life
scam
Your credit card companies are not going to offer you settlements if you are current (not behind) on your payments. If credit card companies offered settlements to people who are current on their payments, then everyone would be calling them up and asking for settlements.
They will only negotiate on accounts that are at/near default. Any settlement for less will be a negative factor on your credit score.
If you want to take the risk, you can deliberately let all accounts default and charge-off to attempt 50% settlements. This is what debt settlement firms do. This tactic is risky and may backfire…resulting in a court summons….leading to a judgment and wage garnishment.
this is such bullshit.
if you don’t take out a loan, you don’t have any debt.
duh!
Reena almost has it right. The only part I don't agree with is taking the highest balance. IF you take the highest balance, it will take much longer to free up the cashflow to get cracking on the next one. The best way to pay off debts is to free up as much cashflow as possible to pay off the debt.
Start with the smallest balance, and clear that one up first. This will not only give free'd up cashflow to put it on the next balance, but it will also give you a sense of accomplishment so it actually looks like you're doing some good. The key is to continually keep your monthly payment total the same, you're just shifting the payments from one to another as you pay each one off. And yes, once you've paid them all off it's best to move those same monthly payments right into an investment of some kind. You're used to making those payments anyways.
Starting with the smallest balance is what almost any professional I've ever talked to has suggested.
If it's all on one card, free up as much cash as you can in your budget and pay as much as you can on it. That's the only way to do it.
I paid off my credit cards after seeing this guy’s other video.
I don’t mind having a luxury car debt or home mortgage (which is ironically, alot higher) but I paid off my cards when I really figured out how bad I was getting fucked.
The numbers you are telling us means you are paying 24% interest on the card. WAY TOO MUCH! What is the matter with you?
On the good side you are paying it down a lot every month. Keep that up and you will have it paid off in around 24 months, not 10 years. You just have to stop adding new stuff to it every month.
If you are charging $320 in new bills each month then you will never pay it down.
Your credit score is high and you can probably get a card with a better rate. Some cards give you a good rate on transferred balances.
So, what do you do?
-Stop using the card for anything.
-Keep paying the $500 a month.
-look for a card that will let you transfer the balance at a 9% rate or lower.
-use your tax rebate to pay down the bill.
-do you really need two cars?
-and, of course, get another job.
You said some of the debt is for school. Is the school going to help you get a better job? If so, then the answer is different than if the school is not going to help in that area, why are you spending the money?
Hope that helps.
U is smart.
Them is sum smart thing you is sayin.
How does that “eliminate debt”?
If I may make a suggestion – Don't do the consolidating….. to my understanding they basically tell your creditors that you can't pay them, but if they do a settlement they will get paid now and the creditor usually agrees, but marks it off as bad debt or something like that and closes the account…. or something like that…… I did hear it hurts your credit score big time……..
I suggest contacting a credit counselor (a non profit one) or even contacting Suze Orman at http://suzeorman.com and she will be glad to help you……… But from what I heard (and if I remember right it was on a episode of Suze Orman which airs Saturday nights on MSNBC that it does hurt your credit if you consilidate……
Also, to pay them off quickly…. start with the one with the least amount (lets call this card 1) and pay extra on that one….. once paid off and if you can afford it take the payment and if possible the extra payment that you would have paid on Card 1 above and apply it to your next card with the least amount, etc, etc….. until all is paid……
Hope this helps…….
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