Paying Off Credit Card Debt
Getting out of credit card debt is not as fun or easy as getting in it in the first place. But with discipline, it is possible. There are several options for paying off credit card debt (and as a bonus, the feeling of pride in your accomplishment is free).
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Instructions
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Once you have arrived at your total credit card debt amount, decide if you can conquer the debt with a simple tweak of your budget. In some cases, your plan may involve only reducing expenses. Use the cash you save to make extra payments on the credit card with the highest rate of interest. Paying this card off first will save cash in the long run. Repeat this process with each credit card until your debt is paid off.
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In many cases, adjusting your budget will not yield enough extra money to pay off credit card debt. If that is your situation, other options are available. The most obvious of these is earning additional income. Do this by:Taking a second job.Renting a room in your home or subletting your apartment.Selling your home.Selling your car (use the savings on maintenance, gas, insurance, etc. to pay off credit card debt).Nurturing the entrepreneur inside (turn talents and hobbies into business opportunities).
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If you can't stick to a payment plan there is help. Consider working with an agency such as Consumer Credit Counseling Service. There are several advantages to working with Consumer Credit Counseling Service:They are a reputable agency.They can negotiate reduced or waived interest rates with your creditors (thus saving you money and allowing you to pay off credit card debt faster).They make one monthly automatic payment deduction from your account and forward payments to all creditors on your plan (this helps you stay on track by removing the temptation to spend the money elsewhere).They send you a monthly statement that helps you track your progress.The service is available at a reasonable cost.
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Tapping into your home equity is another option for paying off credit card debt. Generally, home loans carry a lower rate of interest than credit cards. You will pay less interest on your credit card debt if you pay it off with a home equity loan. Use this option only if you are prepared to adopt new spending habits. Taking money out of your home to pay credit card debt now, means you will not have this financial cushion available later.If you do choose to pay off credit card debt with a home equity loan:Compare loan details carefully to get the best deal.Understand the loan terms fully before you sign anything.Cash out only as much as you need for your credit card debt (you may even want to consider getting only enough to pay off a portion of your debt, then adjusting your budget to pay off the rest).Avoid making any new credit card debt.
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Another option for paying off debts is offering to settle with your creditors. This option allows you to pay only a portion of the amount owed to fully satisfy your debt obligation. If you choose this option:Be sure that the amount paid does, in fact, satisfy the debt.Keep meticulous paperwork. What you don't want is to have the debt resurface after you have already made an agreement you thought satisfied the obligation.Talk with the creditor about how the agreement will be reflected on your credit report.Order copies of all three credit reports to be sure that the arrangement is reported accurately.
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Tips & Warnings
Avoid working with debt resettlement agencies that promise miracles and charge big fees. Real help is available. Find it by researching companies carefully, and reading the fine print before entering into any agreement.
