You may think that eliminating your credit card debt is impossible but you’re wrong. Without having a plan to pay down your debts, you may be stuck with paying minimum payments and reaching balance limits for years on end. Although it may take time, eliminating debt is possible using a variety of methods. First and foremost, you must stop using plastic to pay for purchases. You’ll never eliminate credit card debt if you continue to let it accumulate.
Use Snowball Payments
You may have heard of the debt snowball plan. Designed to eliminate multiple credit cards’ debt, it’s a principle popularized by financial guru Dave Ramsey. Basically, you pay off one card at a time, carrying over each monthly payment to build your debt snowball. These payment plans work in one of two ways. You can pay off the card with the largest balance first or pay off the card with the highest interest rate first. Use an online snowball debt calculator to determine which method will save you the most money and get you debt-free fastest.
Try to Lower Your Interest Rate
The lower the interest rate, the quicker you may be able to pay off your credit card debt. If you have a limited budget to pay credit card balances each month, you would rather pay the principal balance, not high interest fees. Calling each of your creditors to ask for a lower interest rate will often work in your favor. The less you pay in interest, the more you can afford to pay against the balance. This is a quick way to save on bills and eliminate your credit card debt.
Request a Balance Transfer
If you have several credit cards, contact each one to inquire about balance transfers. Balance transfers allow you to transfer the balance from one credit card to another. Though this does not automatically eliminate your debt, it does have benefits that may lead to a quicker payoff. Creditors may offer a promotional interest rate on the transferred balance and longer terms for pay off. In the end, this can save you thousands of dollars in interest charges and allow you to pay off credit cards with higher interest rates first.
Pursue a Debt Settlement
Eliminating credit card debt is achievable through charge-off, also called a settlement. If your credit card balance is unmanageable and you cannot make the minimum monthly payments due to job loss or other circumstances, you may be able to negotiate a settlement with the creditor. Debt settlement will appear on your credit report and will significantly lower your credit score. Work with creditors to settle credit card balance for a fraction of the balance. You will pay only a portion of the total balance, the rest of the balance is “charged off.”
Francine Richards is a licensed multi-state insurance agent with years of human resources and insurance industry experience. Her work has appeared on Blue Cross Blue Shield websites and newsletters, the Houston Chronicle and The Nest. Richards holds a Bachelor of Arts in communications from the University of Maryland.