What is the best way to pay off credit card debt?
I don't personally have any major credit card debt, and the debt that I do have is under control. However, I know some people who have let their credit cards get out of hand and I'm sure there are people searching for ways to pay it off. So I ask you, What is the best way to pay off credit card debt? Any suggestions?
My suggestion is outdated. A few years ago you could get a new credit card by transferring debt from one card to another without any transfer fee and no interest charges for several months. I used this (kiting cards) to get most of my debt consolidated. Now banks usually tack on a 3% transfer fee, just adding to your debt.
SO - I would say the best way is to find a bank that would consolidate your debt. It may not give you a better money position, but the peace of mind of having only one loan to track, one fee to pay, and one contact if you have some problems is worth it. Negotiate...for the lender's part, getting some interest is better than none. If you can convince them you really want to become solvent, you will have formed the basis of a solid relationship for the future. Don't despair...it is possible!
Depends on the sutuation, but for those with equity in their homes that is sizeable it may pay to take a HELOC against the house to at least get the tax deduction on the interest payments.
First of all, LEAVE YOUR CREDIT CARDS AT HOME. Use a debit card or good old cash for your transactions. The idea is to freeze your current credit card debt. Then do this:
Assuming you have debt on multiple cards, figure out which is the one with the highest interest rate. This is the one you want to focus on first. Do everything you can to pay off this one card while paying the minimum on the others. Once this one card is paid off, select the card with the next highest interest rate and go to work on that one.
It will take awhile, maybe years, but that's how it's done.
As much as is possible, not the minimum amonthly amount, I've heard it said that doing that way with all the monthly interest it accrues, it will take about 30 years to clear.
They must first want to pay off their credit card debt. If they do not make this decision, all the excellent advice available to them will be useless. One a decision has been made, it will pay to get professional advice. There are lots of professionals who specialise in this type of help and belong to organizations that a free to the public. Any professional worth their salt will help the person develop a plan that is tailored to their financial disciplines and habits. This plan will be designed to change their habits over a period of time whilst implementing the plan to reduce the credit card debt effectively.
If no professional is available the very basic steps would be as follows,
Destroy the credit card
If they cannot pay cash for an item, they cannot afford it.
If they cannot increase their income, they need to cut back on all their expenses to the very basics. IE Mortgage/Rent, Power, Food, (Set a limit, basics only) Telephone, Fuel and Insurance if any.
Get all the payments made automatically through their bank.
With what is left over pay the credit card with most of it. For instance if you have $150.00 left over. Pay $100.00 each week on the credit card.
Don't spend the $50.00 except in emergencies. Do not touch what is in the bank until everything has been paid including the credit card. So if all the payments have gone it. Wait for a day before going to withdraw.
While this is being implemented it will pay to;
Keep looking for a professional.
Keep looking for ways to increase your income.
If they are lucky to find extra income this should go toward paying off the credit card.
by sandra rinck9 years ago
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by Gous Ahmed6 years ago
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What questions would you like to see answered about credit card debt?
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