As a new couple, there may be many reasons why you have credit card debt, including paying for your wedding. Unfortunately, there are no quick-fixes to terminating all credit card debt. Essentially, you have three options to eliminate this debt. You can pay the full amount you owe, negotiate a settlement for less than your entire balance owed or file for bankruptcy. Because settlement and bankruptcy carry negative credit ramifications, finding a way to pay off your debt in full is usually the best option for your future.
Liquidate your savings. While this may not be the best overall method for everyone, the fastest way to get out of debt is to use any available cash to pay down the entire amount owed.
Use the snowball method. As popularized by personal finance expert Dave Ramsey, this method involves paying off your smallest credit card balance first before moving on to the larger ones. Paying off any debt rapidly provides a psychological boost to continue your payment plan as you can see results relatively quickly.
Pay off your highest interest credit cards first. In straight mathematical terms, this makes the most sense in terms of terminating all your credit card debt. The less interest you have to overcome, the faster you can eliminate all of your debt.
Transfer balances to a low-interest card. While moving your debt to another card won't immediately eliminate your balance, it will save you in interest costs, sometimes dramatically. This interest savings allows you to put more money toward eliminating your debt, allowing you to pay it down faster.
Call your credit card companies to negotiate. If you are having severe financial difficulties, you may be able to negotiate a reduced balance with your lenders. Typically, a credit card company won't negotiate unless you have already missed a payment or two and it appears you might not be able to satisfy your obligations. Negotiations with a card company can often result in the termination of your debt if you pay the full amount of the reduced balance immediately or within no more than a few payments.
- Forbes.com: How to Eliminate Credit Card Debt
- Bankrate.com: 6 Ways to Pay Off Credit Card Debt
- Nolo.com: What Bankruptcy Can and Cannot Do
- United States Courts: Discharge in Bankruptcy
- Experian.com: Credit Advice: Bankruptcy Remains on Your Credit Report for up to 10 Years
- MilitaryMoney.com: How to Negotiate a Payment Plan or Settlement with Creditors
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