How to Eliminate High Percentage Credit Card Bills

Eliminating high-interest credit can improve your financial situation.
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While getting into any type of credit card debt can be a slippery slope, cards with high interest can quickly snowball, particularly if you make only minimum payments. A debt-reduction program should focus on eliminating high-interest credit cards first. Even if you maintain the same level of debt, reducing your interest rates by 10 percent on a $10,000 balance could save you $1,000 per year simply in interest. Negotiation, balance transfer and outright payment are three ways to eliminate your high-interest credit card bills.

Step 1

Pay your bill in full. If you have the cash reserves, this is the easiest and most effective way to eliminate your high-interest debt. If you have cash in a bank account earning little to no interest, paying off a credit card with a 15 or 20 percent interest rate will save you lots of money in the long run.

Step 2

Transfer your balance to a lower-rate card. If you have good credit, you may be able to score a zero-percent interest balance transfer, at least for a limited time. Some balance transfer offers carry up-front fees of up to 4 percent, so factor this cost into your balance transfer calculation. Even with less than perfect credit, you may have some cards with lower interest rates than your other ones. Move your highest-interest balances and eliminate those credit card bills in favor of cheaper credit.

Step 3

Negotiate a better rate. Call your credit card company to ask if it is willing to lower your interest rate. Leverage any strengths you have, such as a good credit history or a long-standing business relationship with the card company. Mention you are considering moving your business to another company that is offering you a lower rate. Every percentage point you can lower your interest rate will make it easier to pay off your balance and eliminate your debt.

Step 4

Reduce your spending. Write down every dollar you spend and see where you can cut back. Allocate all of your available discretionary income to pay off your cards with the highest interest rate. By paying more than the minimum payment, you can cut months or even years off your debt-elimination schedule.

Step 5

Take out a lower-rate loan. You can borrow from your 401(k), your home equity, or most banks or credit unions to consolidate or pay off your debt. Rates on these types of loans are generally much less than those on high-interest credit cards.

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