How to Pay Off Credit Cards Without Consolidating

Consolidating credit cards can result in further debt problems.

Some credit card debts seem to never go away. You may be looking to consolidation as the only means to pay back the credit cards and get a better deal on repayment. In most cases, consolidation actually results in higher debt because the consolidation loan used to pay off the credit cards allows the use of credit cards again, resulting in a vicious cycle that is hard to break. Instead of consolidating, there are ways to pay off the credit card debt without risking further debt.

Instructions

1. Talk to the lenders about reducing interest rates. Lenders are sometimes willing to lower interest rates, especially if you have consistently made payments on your credit cards and have good credit with the lender.

2. Work out reduced payment plans with the lender during hard times. Contact lenders immediately when something an emergency comes up that will make payment either late or less than the minimum payment. Explain the situation and ask for a reduced payment for a certain time period until the problem has been dealt with.

3. Talk to a credit counselor. Not only can credit counselors look at the specific situation and give advice on the best action for the situation, but they can help with realistic budgeting and making a plan for repaying the credit cards according to what is possible, considering earnings, debt amounts and interest rates.

4. Make payments that are as large as possible to the credit cards each month. Once interest rates are lowered, minimum payments on credit cards are often lowered as well. The best way to pay back credit card debt without consolidating is to lower the interest rates and then pay as much as possible each month until the debt is completely gone.

5. Start a debt management plan. Many certified credit counselors will suggest the debt management plan, but use it only as a last resort. In this method, a single payment is made to the credit counseling agency, which then pays all of the lenders based on terms that have been negotiated with the lenders. Start this plan as a last resort because it can result in negative marks on a credit score, and there are many scams that take the money and never pay the lender. Proceed with extreme caution if you use this method.

Tips & Warnings

• Research credit counseling agencies before using them and check on them with the Better Business Bureau.

References

• Federal Trade Commission: Knee Deep in Debt
• Keep Your Ducks in a Row: How Can You Get Out of Debt and Stay Out of Debt?