Stop using those credit cards
Maybe this sounds too simplistic, but the best way to get control of your credit card debt is to stop using those credit cards. In fact, if you’re having a really serious problem with credit card debt, you might want to just cut up those cards. If you continue to pay only the minimum monthly payments required, you will eventually get out of debt. However, you will get out of debt much faster if you pay more than the minimum amounts required.
Check into a zero interest transfer card
If you are having a problem with credit card debt – and you probably wouldn’t be reading this article if you weren’t – sit down and check out the interest rate you’re paying on each card. You should owe the most money on the card with the lowest interest rate. If this is not the case, you may want to check into a zero interest transfer card. This is where you transfer all of your credit card debts to one with a lower interest rate and that will charge zero interest for some period of time. We saw one of these cards recently where you would pay no interest for 15 months. This “timeout” means the money you pay each month then goes against your balance to help you get out of debt faster.
Borrow from your retirement account
If you have a 401(k), a Roth IRA or some other type of retirement account, you might be able to borrow from it to pay off either some or all of your credit card debts. This is a sort of double win in that every dollar you have to pay back goes to you and not to some third party. There is one downside to borrowing from a 401(k). You probably will have only five years to pay off the debt. And if you leave that company, your debt becomes immediately due. In the event that you can’t pay the debt, whatever amount you borrowed is treated as a distribution. You’ll end up with the tax bill, which will include a penalty if you’re less than 59 ½ years.
Renegotiate your terms
You could contact your credit card companies and ask for a new, lower schedule for repayment. If this is the first time you’ve gotten into trouble with credit card debt, you might get a very favorable reception. This will be especially true if you tell them you’re having so many financial problems that this would be your last last resort before filing for bankruptcy.
If all else fails
As a last resort, you could file for bankruptcy. This would eliminate all of your credit card debts and get any debt collectors off your back. However, a chapter 7 bankruptcy, which is the most popular, will not discharge all of your unsecured debts. You would be left to pay off any student loan debt, past due child support or alimony and any federal taxes due.
True credit card debt relief
With the exception of filing for bankruptcy, none of the tactics described in this article will actually reduce your credit card debt. However, if you put our debt counselors to work, they can get your credit card balances and interest rates reduced and probably save you thousands of dollars. They will also help you develop an affordable payment plan that can get you completely out of debt in 24 to 48 months.
Thousands of American families have let us help them achieve credit card debt relief and there’s no reason why you can’t be one of them. Be sure to call our toll-free number for immediate help or fill out our form for a free debt analysis.